Preamble

The House met at half-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

Death of a Member

Mr. Speaker: I regret to have to inform the House of the death of Sir Thomas Galloway Dunlop Galbraith, KBE, Member for Glasgow, Hillhead, and I desire, on behalf of the House, to express our sense of the loss we have sustained and our sympathy with the relatives of the hon. Member.

Oral Answers to Questions — WALES

Mr. Ioan Evans: On a point of order, Mr. Speaker. The appearance on the Order Paper of a question about the recent weather in Wales might have had some influence on whether there was to be a statement on the matter. However, the hon. Member who tabled the question is not in the Chamber. In view of the serious situation in Wales, will the Secretary of State confirm that he intends to make a statement later?

Mr. Speaker: There are two questions about the weather in Wales which could go rather wide. The hon. Member who tabled the question referred to may well arrive by the time that question is reached.

Several Hon. Members: rose—

Mr. Abse: On a point of order, Mr. Speaker. Given the appalling conditions that have existed in Wales and the appalling industrial, social and personal consequences, we are all astonished that the Minister has not come forward with a statement. Since the Minister has been so sluggish, could not question No. 11 be taken at the end of Question Time—since the hon. Gentleman who tabled it is not yet in his place and this is an important matter—so that we can discuss the serious situation?

Several Hon. Members: rose—

Mr. Speaker: Order. May I point out that such points of order are taking up the time allotted to other hon. Members, who are entitled to have answered the questions they have on the Order Paper?

Mr. Ray Powell: Further to that point of order—

Mr. Speaker: Order. I am not taking further points of order on that subject.

Pupil-Teacher Ratios

Mr. Knox: asked the Secretary of State for Wales what was the pupil to teacher ratio in primary schools in Wales at the most recent count; and how this compares with the ratio in 1978.

The Under-Secretary of State for Wales (Mr. Michael Roberts): The ratio was 21·7 to 1 in January 1981 compared with 22·6 to 1 in January 1978.

Mr. Knox: Does my hon. Friend agree that there has been satisfactory improvement in the pupil-teacher ratio in recent years in Welsh primary schools? Is the present figure the best ever?

Mr. Roberts: The figure is the best ever. Most hon. Members will agree that teachers constitute the most important resource in education and that the figure is altogether satisfactory.

Mr. D. E. Thomas: Does the Minister concur with the view expressed by the Secretary of State for Education and Science? How many teachers in Wales does he intend to sack?

Mr. Roberts: Every hon. Member should be concerned about effective teaching in our schools.

House Building

Mr. Anderson: asked the Secretary of State for Wales what is the total of housing starts by Welsh local authorities, by housing associations in Wales and for each Welsh housing authority in the latest quarter.

The Under-Secretary of State for Wales (Mr. Wyn Roberts): In the quarter ending 30 September 1981, 210 local authority dwellings and 260 housing association dwellings were started in Wales. The distribution by districts will be circulated in the Official Report.

Mr. Anderson: Will the Minister confirm that those figures represent an all-time low, at least in post-war Britain? Does the Welsh Office make any serious attempt to ascertain housing needs in Wales? Is it aware of the misery caused to many families by mounting waiting lists and that, because of high unemployment, many of those who might have expected to buy in the private sector cannot, and have to fall back on the public sector? What will the Welsh Office do to solve the problem?

Mr. Roberts: If I were the hon. Gentleman, I should be wary of putting too much blame on the Government. Housing starts have been falling for several years and were more than halved during the last Administration's period of office. The rate of reduction has been greater than that of housing allocations. This year there is likely to be an underspend by the housing authorities, and we have increased housing allocations for next year.

Mr. Hooson: Will my hon. Friend remind the House about the increase that was announced by my right hon. Friend the Secretary of State towards the end of last year?

Mr. Roberts: Next year, spending by local authorities will rise from £97·8 million to £115·6 million. The allocation to the Housing Corporation for next year will be increased from £30·4 million to £39 million.

Mr. Alec Jones: Does the Minister appreciate that he has succeeded in wrapping up in parliamentary jargon the fact that local authority housing starts in Wales are now running at about 1,000 a year, which is the lowest figure since the war? Surely that cannot give satisfaction to anyone who claims or pretends to be concerned about the 25,000 people on council house waiting lists in Wales.

Mr. Roberts: I accept that the level of starts is disappointing. However, that cannot be blamed entirely on the Government, because there is likely to be an underspend of about £20 million this year.

Following is the information:


Welsh Housing Starts—3rd Quarter 1981



Local Authorities
Housing Associations


Aberconwy
—
—


Afan
—
8


Alyn and Deeside
4
—


Arfon
—
—


Blaeneau Gwent
—
—


Brecknock
—
27


Cardiff
16
46


Carmarthen
12
—


Ceredigion
—
3


Colwyn
—
—

Local Authorities
Housing Associations


Cynon Valley
—
37


Delyn
—
—


Dinefwr
—
—


Dwyfor
—
—


Glyndwr
24
—


Islwyn
—
49


Llanelli
—
—


Lliw Valley
—
—


Merionnydd
—
—


Merthyr Tydfil
—
41


Monmouth
—
—


Montgomery
—
—


Neath
34
—


Newport
—
—


Ogwr
34
49


Preseli
—
—


Radnor
—
—


Rhondda
—
—


Rhuddlan
37
—


Rhymney Valley
—
—


South Pembs
—
—


Swansea
27
—


Taff Ely
—
—


Torfaen
9
—


Vale of Glamorgan
13
—


Wrexham Maelor
—
—


Ynys Mon
—
—


Wales Total
210
260

Secondary Schools (Pupil Achievements)

Mr. D. E. Thomas: asked the Secretary of State for Wales what proportion of young persons left secondary schools in Wales in 1980 with no formal certification; and whether he is satisfied with the level of achievement.

Mr. Michael Roberts: The proportion is 25·1 per cent., based on provisional analysis of the sample survey of 1980 leavers. We are concerned that schools should improve their performance, especially in the education of children of less than average academic ability.

Mr. Thomas: Will the Minister confirm that the comparable figure for England is 12 per cent. and that that invidious comparison should cause the Welsh Office immediately to institute a full inquiry into the discrepancy, taking into account the views of the teaching profession and all those who are concerned about the education of their children in Wales?

Mr. Roberts: I confirm that the comparable figure for England is about 12 per cent. However, the hon. Gentleman will know that CSE and O-level examinations were designed for the 60 per cent. of pupils considered to be of higher academic ability. He will also know that for a long time many hon. Members, including myself, have expressed grave concern about the matter. We have had many developments in the past few years, including the Mold conference. I am confident that local education authorities and schools are giving careful consideration to the advice, guidance and information offered by recent Government publications or by Her Majesty's inspector and in APU survey reports. I am sure that they will also do so in the forthcoming Cockcroft report.

Mr. Coleman: Is the Minister aware that between September 1980 and September 1981 over 900 fewer lecturers and teachers were engaged in Wales? Would it not have been better to retain their services to improve educational standards?

Mr. Roberts: The hon. Gentleman has completely ignored the significance and importance of falling rolls. He will know that, whatever Government were in power, the number of teachers employed would have decreased. If the hon. Gentleman had listened carefully to the answer to question No. 1, he would have known that the pupil-teacher ratio is at a record level.

Unemployment Statistics

Mr. Barry Jones: asked the Secretary of State for Wales by how many and by what percentage the total unemployed has risen in Wales since May 1979.

The Secretary of State for Wales (Mr. Nicholas Edwards): At 10 December 1981 the seasonally adjusted level of unemployment was 158,700, an increase of 77,300, or 95 per cent., over the corresponding level at May 1979.

Mr. Barry Jones: With the certainty that unemployment totals in the United Kingdom will go steeply beyond 3 million, which will have serious consequences for Wales this year, does the Secretary of State believe that the Nissan car plant will be located in Wales? Does the right hon. Gentleman know that, to those unemployed in Wales, his approach to unemployment appears to be laggardly and unconvincing?

Mr. Edwards: I can give no information about the location of the Nissan car plant, because that is a decision for the company. The company has not told the Government whether it will go ahead with the project, nor has it stated a preference. As to the suggestion that we have a laggardly approach, we are in the middle of by far the greatest programme of site development and factory building ever undertaken in Wales. Factory allocations, the space occupied and the number of jobs provided all reached record levels during the past year.

Mr. Wigley: Is the Secretary of State aware of the complete failure of the Welsh Office to supply jobs to replace the 2,000 being lost in the Dinorwic pump storage scheme in Gwynedd? Is he further aware of the concern expressed by Gwynedd county council last week about the danger to the North Wales railway line from the threatened rundown of Sealink at Holyhead? Will he consider those matters and meet the county council as a matter of urgency?

Mr. Edwards: I cannot accept that the Government are in a position to supply jobs in the way suggested by the hon. Member, but I have agreed to meet Gwynedd county council and local authority representatives to discuss the problems faced in Gwynedd. Nor do I accept the hon. Gentleman's comment about the rundown of Holyhead. If the B and I Line is to operate out of that port that will bring many helpful opportunities in the future.

Mr. Grist: How many of today's visibly unemployed were yesterday's hidden unemployed in the shape of appalling productivity figures in Britain?

Mr. Edwards: Undoubtedly there have been striking improvements in productivity. One has only to consider the performance of the great steel plants at Llanwern and Port Talbot, with the manning levels there and in many other factories, to realise that a transformation has taken place. Those factories have become enormously more competitive, which gives a real opportunity for economic recovery.

Mr. Rowlands: Is the Secretary of State aware that one response to unemployment in the Heads of the Valleys is to set up a pilot project to interrogate the unemployed about their availability for work, and that this is causing great resentment? Has the Secretary of State seen the questionaire put out under the pilot project, which asks for the personal and domestic circumstances of every unemployed individual, behind which is the threat that unemployment benefit will be withdrawn? Does the form have any statutory basis? If not, will the Secretary of State suggest that no individual should complete it?

Mr. Edwards: The form is not issued by my Department and I am not responsible for it. However. the hon. Gentleman must know that it is helpful for us to have as much information as possible about the individuals concerned.

Sir Anthony Meyer: Does my right hon. Friend agree that the reason for Nissan or any other major foreign investor coming to Wales is that it can sell its products from Wales throughout the EEC? Does he further agree that such vast inward investment is gravely endangered by Opposition threats, which fortunately everyone now realise will never be carried out?

Mr. Edwards: I agree with my hon. Friend that it would be a disaster for Wales if it was believed that Britain was leaving the EEC. The massive inward investment that we have attracted, such as Mitel, which will provide about 2,000 jobs, would be lost to Wales.

Mr. Alec Jones: The Secretary of State referred to the efforts being made by the workers at the Port Talbot and Llanwern steelworks. Can he assure the House that the deplorable unemployment figures, for which the Government are responsible and which were announced earlier this afternoon, will not be increased further by more closures in the steel industry in Wales? Will the Secretary of State tell Mr. MacGregor that we have had enough and that the Welsh steel industry has borne more than its fair share of steel closures? Does he agree that the efforts of the men at Port Talbot and Llanwern, especially during the past week, have earned them the right to exemption from further cuts?

Mr. Edwards: The British Steel Corporation has paid tribute to the magnificent contribution of those who succeeded in reaching the steel plants during the bad weather or who were unable to get out of them. I join in those tributes. The improved competitiveness of those plants provides the best prospect for their future. During the past week the chairman of the British Steel Corporation has drawn attention to the consequences of events in America and to the financial position of the corporation. There is no doubt that some losses, although we do not know how much, will be suffered at Port Talbot as a result of the bad weather. However, I do not believe that that event of itself will affect the future prospects of the plants. In the long run it depends on their being competitive with other steel plants in Europe, and the plants have achieved that competitiveness in the past year.

Mr. Roy Hughes: asked the Secretary of State far Wales what is the increase in male unemployment in Gwent since May 1980 expressed in percentage and numerical terms.

Mr. Nicholas Edwards: At 10 December 1981 male unemployment showed an increase of 9,437, or 87·2 per cent., over the corresponding level at May 1980.

Mr. Hughes: Has the Secretary of State considered that further job losses could occur if the port of Bristol's application for Government financial assistance is granted, as it would enable it further to undercut the South Wales ports? Is he aware of the statement of the Conservative leader in Bristol calling for the closure of Newport and Barry docks? Will he speak up for Welsh interests?

Mr. Edwards: People in all parties speak for their local interests. However, the decision will be taken not by the leader of the Conservative council in Bristol but by the Government, who will take full and proper account of the important role of the South Wales ports.

Mr. Abse: As the Secretary of State for Employment emphasises that the appalling weather conditions will exacerbate unemployment, and as no other district in Wales, except perhaps the Secretary of State's county, has suffered more than Gwent, will the right hon. Gentleman say what money he intends to put at the disposal of local authorities to deal with the problems of unemployment resulting from the weather? Or does he still stubbornly say that many local authorities will not have a penny to deal with the ravages of the weather?

Mr. Edwards: The Government have already announced that exceptional expenditure over and above the product of a penny rate will be met by the Government. Such financial provision is entirely in line with precedent and exactly in accordance with the practice followed by the previous Government in the 1978–79 crisis.

Coalmine (Margam)

Mr. Ray Powell: asked the Secretary of State for Wales whether he has taken any further steps regarding the commencement of a new (deep) mine at Margam since his reference to this development in the debate on employment opportunities in Wales on Monday 14 December, Official Report, column 66.

Mr. Nicholas Edwards: No, Sir. The next step is for the National Coal Board to complete its investment appraisal of the project.

Mr. Powell: Why does the Minister not treat the matter with the urgency that it deserves? If he is genuinely concerned to create jobs in Wales and to reduce unemployment, why does he not persuade his Cabinet colleagues to invest in the development of the Margam mine to serve the long-term interests of the Welsh mining industry and protect the coal industry in general?

Mr. Edwards: The decision whether to invest in the Margam mine is not for the Cabinet but for the NCB. I have discussed the project with the chairman of the NCB. As he has said on a number of occasions, because of the depth of the mine, it is a high cost development and it is important that there should be a market for its products. However, the NCB is continuing its assessment to see whether improvements could make the project competitive and viable.

Mr. Grist: Will my right hon. Friend say whether the threat or reality of a strike in the coalfields will increase the likelihood of investment in this or any other new mine?

Mr. Edwards: It was the chairman of the NCB who, on a recent visit to Wales, said that a strike would damage future investment prospects.

Area Health Authorities

Mr. Coleman: asked the Secretary of State for Wales when he next expects to meet the chairmen of the area health authorities in Wales.

Mr. Wyn Roberts: I hope to meet the chairmen on Friday next.

Mr. Coleman: When the Minister meets the chairmen will he express the concern of health care professionals and health authorities in Wales that the differences in the structure of the health care service in Wales and in England are not properly appreciated by Ministers at the Welsh Office and by Whitley councils and that, as a result, the Whitley councils are taking decisions contrary to agreed staff and management side views? Will he increase the representation of Welsh interests on Whitley councils and provide more adequate briefing for the officials who advise management side representatives on the Whitley councils?

Mr. Roberts: I am surprised to hear the hon. Gentleman say that the differences between the reorganisation in Wales and in England are not fully appreciated. They are appreciated by Ministers, because we have been responsible for the differences. I have heard no complaints about the Whitley council. Welsh representation is adequate, and special arrangements are being made for Wales.

Mr. D. E. Thomas: In his meetings with AHAs will the Minister discuss the pay of Health Service employees, in view of the Government's refusal to implement adequate pay levels for nurses and other health care personnel?

Mr. Roberts: It is unlikely that I shall discuss the matter with AHA chairmen, as it is strictly for the Whitley council.

Rate Support Grant

Sir Anthony Meyer: asked the Secretary of State for Wales what has been the reduction in the rate support grant for local authorities in Wales for the coming financial year; and if, for comparison, he will give the reduction for local authorities in England.

Mr. Nicholas Edwards: The aggregate Exchequer grant for Wales for 1982–83 will be 72·5 per cent., compared with the 1981–82 level of 73·4 per cent. In England aggregate Exchequer grant will be reduced from 59·1 per cent. to 56 per cent.

Sir Anthony Meyer: Will my right hon. Friend accept that that is a considerable achievement within the Cabinet in his battling for the ratepayers of Wales? Is he aware, however, that many of us are receiving representations from our constituents against the Government's decision not to put a ceiling on the rates to be paid by industry? If we are serious in our desire to create jobs, even at the expense of the domestic ratepayer, must there not be an attempt to limit rate rises to industry?

Mr. Edwards: I have removed the differential between domestic rate relief in England and in Wales and


transferred the sum to benefit industry and business in Wales. The £23 million involved will be in the block grant, so some local authority estimates of the consequences are misjudged. As a result, local authorities will be able to keep rate increases to industry very low, and in many cases there will be no grounds for any increase. That is the right priority at this time.

Mr. Anderson: Is this not the third year in succession that the rate support grant has been reduced lay the Government, and that now, for the first time, the domestic rate relief is being halved? Will not the current rate increase for all domestic ratepayers in Wales be higher than the rate of inflation?

Mr. Edwards: It is an extremely satisfactory settlement for Welsh local authorities, based on their good performance in the past year. It should enable them broadly to keep services at much the same level as before, if they can maintain pressure on costs. Rate increases for the domestic and industrial ratepayer in Wales should be significantly less than in England and a great deal less than in the past year or so. Furthermore, I have able been also to give substantial additional capital allocations to Welsh local authorities—about a 20 per cent. increase—because of their good performance in containing expenditure this year.

Mr. Wigley: Does the Secretary of State recall that at one time the 36 per cent. domestic rate relief was justified by the impact of water rates in Wales and the need to keep them down? As the domestic ratepayer is now losing the benefit of that, and as the partial equalisation scheme is being abandoned, what will the right hon. Gentleman do to lower water rates in Wales?

Mr. Edwards: Both the rate poundages and the actual rates paid by Welsh ratepayers have been significantly lower than in England, so it is hard to justify higher domestic rate relief in Wales. Furthermore, the Welsh water authority's charges are by no means the highest; they are somewhat in the middle of the table.

Mr. Hooson: Will my right hon. Friend clarify his statement about the special emergency provisions over and above a penny rate? Will he confirm or deny the interpretation of the Welsh counties committee that the inclusive rate product relates not to a rate of 1p, but to one of 2½p?

Mr. Edwards: The Government have announced that a 75 per cent. grant will be paid on net additional expenditure in excess of the product of a penny, grant-inclusive rate. Some local authorities have expressed surprise that the payment will be calculated on a penny rate including grant. However, that practice has been followed in the past. There can be no reason for surprise, as the position was made clear in a statement to local authorities issued in 1980—

Mr. Rowlands: The current position is the worst since 1947.

Mr. Edwards: As doubts have been expressed, I must make it clear that there is no question of the special grants to local authorities faced with weather emergencies counting against the rate support grant cash limit.

Mr. Abse: On a point of order, Mr. Speaker. Because the Secretary of State wishes to repair his own glaring omission in not making a statement, the whole issue is being dragged in—

Mr. Speaker: Order. If we reach question No. 14 before 3.10 pm, which I believe we shall, I shall allow supplementary questions to range widely.

Mr. Abse: rose—

Mr. Speaker: Order. The hon. Gentleman did not raise a point of order. He passed an observation. It was in no way a point of order on which I could rule. He is now wasting the time of the House.

Mr. Abse: On a point of order, Mr. Speaker.

Mr. Speaker: Order. If we do not reach question No. 14, the hon. Gentleman can take the credit for that.

Mr. Abse: On a point of order, Mr. Speaker. Question No. 14 deals solely with farmers. My people, who are not farmers, although sympathetic to them, also want—

Mr. Speaker: Order. The hon. Gentleman did not listen. I said that, in the interests of the House, I would allow questions to range widely.
I now call the hon. Member for Barry (Sir R. Gower) to ask question No. 11.

Hon. Members: Where is he?

Holiday Homes

Mr. Wigley: asked the Secretary of State for Wales if he is now in a position to give a substantive reply to the memorandum sent to him in March 1981 by Gwynedd county council on the question of the effects of holiday homes on the county, and with proposals to help to alleviate associated problems; and if he will make a statement.

Mr. Wyn Roberts: We hope to be able to reply to the Gwynedd county council memorandum very shortly.

Mr. Wigley: With the problem of arson at second homes in Gwynedd, is it not a disgrace that 10 months have passed without a reply from the Welsh Office? What is the Minister's explanation for that waste of time and loss of opportunity?

Mr. Roberts: The Government's consideration of the issues has taken longer than expected. However, the hon. Gentleman will know from his meeting with me and the hon. Member for Merioneth (Mr. Thomas) on 18 November that many of the issues are complex and difficult. The arsonists should know that the Government will not be pressurised into any ill-considered action by irresponsible and criminal acts.

Mr. Garel-Jones: Will my hon. Friend confirm that second homes are not considered a serious problem by the people of Wales? Is it not a problem caused by arsonists, from which Plaid Cymru attempts to make squalid mileage for itself?

Mr. Roberts: My hon. Friend is right to say that only a very small proportion of the housing stock consists of second homes. He is also right to point out that the representations on that issue have largely come from Plaid Cymru.

Housing Associations (House Sales)

Mr. Grist: asked the Secretary of State for Wales how many schemes for the purchase by tenants of housing association properties have been completed by the Housing Corporation for Wales since the right to buy came into force.

Mr. Wyn Roberts: Information about such sales is not available. The Housing Corporation does not make schemes for the sale of housing association properties to tenants.

Mr. Grist: Is my hon. Friend aware that certain co-ownership societies in my constituency are finding considerable difficulty in effecting total ownership of their properties? Will he investigate that matter?

Mr. Roberts: Of the 31 schemes of co-ownership, 25 have been approved in principle for full development into ownership. I recollect that an association in my hon. Friend's constituency had certain problems, but I thought that we had managed to solve them. I shall be happy to investigate the matter.

Mr. Speaker: Order. I remind the House that I said that I would allow supplementary questions on question No. 14 to range wider than the terms on the Order Paper.

Weather Damage

Mr. Delwyn Williams: asked the Secretary of State for Wales what steps he is considering to alleviate the problems of Welsh farmers following the recent severe weather conditions.

Mr. Nicholas Edwards: Recent heavy snow and exceptional weather conditions have caused disruption to normal life in many parts of Wales. Although the position is gradually returning to normal, conditions are still extremely difficult in many places. My agriculture department and its divisional offices have co-operated with the farming unions to do all they can to deal with calls for assistance.
I wish to pay tribute to the local authorities—which have the primary responsibility for dealing with such emergencies—the Armed Forces, the police, the health and social services agencies and many others, including the farmers, who responded so well, and a large number of ordinary people who have kept industry, agriculture and commercial life going.

Mr. Williams: That reply is very nice, and I join my right hon. Friend in everything that he says, but it does not answer the question. What help does he intend to give in this dire emergency? Does he agree that, although farmers must take the rough with the smooth, the present bad weather constitutes an emergency? Is it not the worst weather in living memory, with temperatures 20 deg. Centigrade lower than in 1947? Surely that merits special treatment and compensation.

Mr. Edwards: I do not in any way underestimate the scale of the problems faced by farmers in many parts of Wales. I have seen them for myself. I have discussed the matter in great detail with Sir Richard Butler and representatives of the farmers unions. They agree that the first priority to deal with the emergency is to gain access to the farms and assist in every practical way. Sir Richard shares my belief that we are not yet in a position to assess

accurately the consequences to the farmers and reach correct decisions about the way to deal with the emergency.
Farmers are well used to the principle that they must accept the possibility of extremely bad weather. When we have more details of the losses—milk has been thrown away and there have been stock losses—we can examine the position on the basis of information, not speculation.

Mr. Ioan Evans: Is the Secretary of State aware that he is treating both the House and the people shabbily by not making a full statement on the most severe winter weather conditions that the people of south and mid-Wales have ever known? Government policies, with their implications for cash limits for the public industries producing electricity, gas and coal, have led to difficulties. Is the right hon. Gentleman aware that the financial constraints imposed on local authorities have resulted in severe problems for the elderly, who are living in intolerable conditions without water or electricity? Will he take emergency action as soon as possible to alleviate those problems?

Mr. Edwards: I note that neither the hon. Gentleman nor his colleagues took the trouble to come to the House to table a question—

Mr. Ioan Evans: In the recess?

Mr. Edwards: The hon. Gentleman did not table a question. My hon. Friend—

Mr. Ray Powell: On a point of order, Mr. Speaker.

Mr. Speaker: Order, If the hon. Gentleman raises a point of order, it will prevent me from calling another hon. Member.

Mr. Powell: I wish to correct something that the Secretary of State said.

Mr. Speaker: Order. That cannot be a point of order.

Mr. Edwards: My hon. Friend the Member for Barry (Sir R. Gower) took the trouble to come to the House and table a question. I am sorry that he cannot be here today to ask his question as he is ill in bed.
The monstrous suggestion that local authorities or others involved in the emergency held off because they had doubts about the financial arrangements should be repudiated in the strongest possible terms. There is no evidence for that allegation. The local authorities have denied it. The Government were extremely prompt, as soon as they had an assessment, in confirming that the precedent for financial assistance in times of emergency would be followed and that financial support would be given to local authorities. No responsible local authority representative or official in Wales held back because of any fears about financial allocation.

Mr. Geraint Howells: We are all aware that last week's snow storm was the worst since 1947. When the Secretary of State has made a full assessment, will he make a statement on whether he is willing to give financial aid to those in business in Wales, especially to those engaged in agriculture?

Mr. Edwards: It would not be sensible to make a statement about financial assistance when we are not yet able to assess the financial consequences. That is a view that the president of the National Farmers Union shares with me. He telephoned me from West Wales to express


gratitude to the Welsh Office and others for the assistance that has been given and confirmed that it was too early to make an assessment. As the situation unfolds I shall consider whether a statement will be appropriate at some stage. I shall consult my colleagues.

Several Hon. Members: rose—

Mr. Speaker: Order. I propose to allow another minute on this question despite the timings on the Order Paper.

Mr. Alec Jones: Does the Secretary of State appreciate that we join him in thanking all the official and unofficial bodies that helped during the exceptional weather? In view of what the right hon. Gentleman has heard this afternoon, may I urge him to make a full statement later this week so that hon. Members and the people of Wales may be satisfied about what has been done? There is no point in confirming what the Government said in 1980 or what the previous Government did in 1978. Very few people in Wales have witnessed before the kind of weather that has been seen in the past fortnight. We deserve and need a far better response than we have had from the right hon. Gentleman.

Mr. Edwards: The right hon. Gentleman says that he deserves a far better response. Responsibility for dealing with the emergency in the first instance fell primarily on the local authorities. Broadly, I think that they did a good job, although each one tackled the problem in different ways. I have seen the work that has been done. I think that in general the response was good. It is too early to make a detailed assessment of the exact decisions that were taken.
The right hon. Gentleman misunderstands the problem when it comes to financial assistance and the scale of the problem generally. As for the penny rate barrier and the assistance that is available once that limit is passed, it is assumed—the assumption was made by the Labour Government—that every local authority will make some reserve provision for emergencies and, if the scale of an emergency exceeds that normal provision, the Government will come in to provide financial assistance above that level. That is precisely what the Government have said. The Government will come in, but the volume of the financial assistance will depend upon the cost of the operation. I have already confirmed that it will not be cash limited.

Oral Answers to Questions — CHURCH COMMISSIONERS

Redundant Churches

Mr. Murphy: asked the hon. Member for Wokingham, as representing the Church Commissioners, if he will make a statement on the policy of the Commissioners towards the disposal of redundant churches.

Sir William van Straubenzee (The Second Church Estates Commissioner, Representing Church Commissioners): The commissioners' general policy towards the disposal of redundant churches is governed by the Pastoral Measure 1968, which provides for the future of a redundant church to be settled by a suitable alternative use, preservation by the redundant churches fund or demolition. I am, however, writing to my hon. Friend to give him more details of the commissioners' policy in this matter.

Mr. Murphy: I thank my hon. Friend for that full and helpful answer. Is he satisfied with the publicity that is afforded to the availability of redundant churches?

Sir William van Straubenzee: Publicity is an issue for individual dioceses. Properties vary enormously, but they are normally advertised. A list of such available properties is kept by the commissioners and it can be obtained by members of the public on request. Since 1969 over 50 per cent. of churches that have been declared redundant have been put to suitable alternative use.

Mr. Greenway: My hon. Friend will be aware that there are occasions when there are clashes of interest between the spiritual and the material when considering the future use of redundant churches. Will he assure the House that where there is such a clash, spiritual considerations will always be in the ascendent?

Sir William van Straubenzee: It can normally be assumed that the Church Commissioners will give due weight to spiritual considerations. The most favoured alternative use would be that of another Christian denomination.

Mr. Robert Atkins: When a church is taken over—it happened in my constituency recently—what happens to the gravestones and the fabric of the church if it has any architectural merit?

Sir William van Straubenzee: Those, too, are matters for each diocese. However, a memorandum of guidance has been issued by the Church Commissioners on such matters. I am answering, by written answer, a number of questions tabled by the hon. Member for Birkenhead (Mr. Field) on precisely these matters. My answer goes into some considerable detail. I invite my hon. Friend to read Hansard tomorrow.

Oral Answers to Questions — HOUSE OF COMMONS

Industrial Relations

Mr. Canavan: asked the right hon. Member for Middlesbrough, as representing the House of Commons Commission, whether the House of Commons Commission is satisfied with the state of industrial relations in the House of Commons.

Mr. Arthur Bottomley: The Commission and the trade unions are not always in total agreement, but there are no current difficulties which cannot ultimately be resolved.

Mr. Canavan: Why was a retired civil servant appointed as House of Commons staff inspector even before the terms of reference of the appointment were announced to the trade unions representing the staff of the House? Has there not been a deplorable lack of industrial democracy in the place, which is supposed to be the mother of democracy?

Mr. Bottomley: The Commission must be left to appoint its own staff. It has taken the step of ensuring that the management will consult the trade unions on the way in which the inspector will carry out his duties and the scope of them.

Mr. Alan Williams: Does my right hon. Friend accept that none of us wants to see avoidable tensions develop in industrial relations in the House? However, does he


recognise that there seem to be excessive delays in negotiations with the trade unions that represent the servants of the House? There has been less than adequate consultation on the changes that have taken place in the administration of industrial relations within Parliament. Surely this should concern all hon. Members as we have not extended to the servants of the House the same range of rights as exist for workers generally.

Mr. Bottomley: The Commission has done its best to meet the trade unions' requirements. The Commission alone is not responsible for the delay. There was a meeting between the Commission and representatives of the trade unions, and it took some time before replies were received. Those matters are now being considered. One of the reasons for the delay in considering the fundamental part of the trade unions' difference is a grading scheme. The company that made the report tended to give more benefits to the higher grades of the staff in the Commons service than to the lower grades. We wanted to examine that more carefully.

Select Committees (Specialist Advisers)

Mr. Murphy: asked the right hon. Member for Middlesbrough, as representing the House of Commons Commission, what fees are payable to specialist advisers appointed by Select Committees.

Mr. Arthur Bottomley: Specialist advisers are paid on a per diem fee basis—I am in difficulty as I do not have my glasses.

Mr. James Callaghan: Would my right hon. Friend like to borrow mine?

Mr. Bottomley: Thank you. They are paid on a per diem fee basis for work done. Three rates are in use, based on the scales for university posts. They are in line with payments made for similar work done for Government Departments. The current daily rates are £50 to £70 a day for professors, £40 to £50 a day for senior lecturers and readers, and £22 to £42 for lecturers.

Mr. Murphy: I thank the right hon. Gentleman for his efforts to answer my question. Would he consider applying an overall strict cash limit to avoid a proliferation of specialist advisers?

Mr. Bottomley: There is a limit to the amount of money that can be spent on specialist services.

Mr. Christopher Price: In its next deliberations, will the Commission consider getting away from the assumption that all specialist advisers are academics, such as professors? Is he aware that some of the best specialists and advisers serving on committees have nothing to do with universities, and are the better for that?

Mr. Bottomley: That appeals to me very much. When I was Minister for Overseas Development I saw craftsmen playing a part in rendering specialist services. Therefore, I am sympathetic towards that question.

Oral Answers to Questions — EDUCATION AND SCIENCE

Opera and Ballet

Mr. Jessel: asked the Secretary of State for Education and Science what representations he has received within the last year on the funding of opera and ballet.

The Minister for the Arts (Mr. Paul Channon): I have had discussions about funding with the chairmen and officers of the Royal Opera House and the English National Opera. I have also had many informal talks with people in the opera and ballet world.

Mr. Jessel: May I say that it is not only the distinguished intake of 1945 that has had to take to wearing spectacles? As London is one of the musical centres of the world, and as opera and ballet are a major draw to tourists, following the substantial increase in real terms of the grant to the Arts Council—on which many of us signed a motion congratulating my right hon. Friend—will my right hon. Friend encourage the Arts Council to see that opera and ballet in London receive at least a proportionate share of that increase?

Mr. Channon: I am grateful to my hon. Friend for his support. I assure him that the Arts Council proposes to devote a substantial portion of its resources to that area. It will be at least as good as the overall increase in the grant that it has received.

Mr. Faulds: Does the right hon. Gentleman not agree that national excellence and international reputation in those areas of the arts must depend on Government willingness to sustain them financially with whatever resources are necessary to do the job properly? May I temper the right hon. Gentleman's happiness about the Arts Council grant by reminding him that, while inflation is running at 11·7 per cent. or 11·9 per cent., the Arts Council's grant increase was only 7·5 per cent.?

Mr. Jessel: In real terms.

Mr. Channon: The cash grant revenue increase for next year for the Arts Council is about 9 per cent.—from £77½ million to £84½ million. Everyone in the arts world to whom I have spoken thinks that it has done well. I have had innumerable expressions of appreciation.

Sir Derek Walker-Smith: Will my right hon. Friend bear in mind that there is considerable concern about the allocation of Arts Council funds both in regard to the d'Oyly Carte Opera Company and generally, as evidenced by the representations by my constituent, Mr. Gower of Sawbridgeworth, in regard to which my right hon. Friend and I are in correspondence? Will my right hon. Friend respond to my request to him to deal with the constitutional position of the accountability and responsibility of the Arts Council in this context, bearing in mind the classic definition of power without responsibility being the prerogative of the harlot through the ages?

Mr. Channon: I well recall Mr. Gower's letter and my right hon. and learned Friend's letter to me. I am studying the matter with considerable care. However, in general terms I must say that that position has been accepted since the foundation of the Arts Council. In general, it works according to the arm's length principle that the Minister of the day does not interfere with the detailed allocation of the grant.

The Arts (Northern Region)

Mr. Dormand: asked the Secretary of State for Education and Science if he will take steps to provide additional funding to arts in the Northern region.

Mr. Channon: Central Government support for the arts is provided mainly through the Arts Council. Council


grants to the regional arts associations, including Northern Arts, have been increased for the forthcoming year in recognition of their special needs.

Mr. Dormand: Is the Minister aware that, because of inflation, the increase that the Northern region has received from the Arts Council means that the North is running to stand still? I do not wish to reduce its share, but why will Scotland receive £10,200,000 while the Northern region, with three-fifths of Scotland's population, will receive only £1,500,000? Does the right hon. Gentleman accept that there is great enthusiasm for the arts in the Northern region? Will he appoint someone from the North to serve on the Arts Council—a national body—to demonstrate that he has a desire to help, particularly as no one from the Northern region has ever served on the Arts Council?

Mr. Channon: The hon. Gentleman makes a persuasive case on the latter point. With regard to his first point, the Scottish Arts Council grant is based on a formula basis that was laid down a long time ago. Regional arts and all the associations are receiving a grant that is well above the rate of inflation and is higher than that received by most other clients of the Arts Council. I am surprised by what the hon. Gentleman says. I have checked the facts carefully. Northern Arts received an increase of over 10 per cent. to 12 percent.

Mr. Freud: When the Minister is looking at disparities in regional grants, will he look at the Eastern region, which, by common consent, has done worse than anywhere else? Does he accept that seniority of establishment is a worse criterion than needs?

Mr. Channon: I accept that point. I am especially concerned about the Eastern Arts Association. I wrote to the hon. Gentleman yesterday assuring him that the concern that he felt over travel subsidies in the area was ill founded.

Mr. Murphy: Does my right hon. Friend agree that, despite the criticisms from the Opposition Benches, the overall level of Government funding for the arts and heritage is a matter for congratulation?

Mr. Channon: I am grateful to my hon. Friend. That generally seems to be the view outside the House.

Mr. Foster: Does the Minister agree that trying to attract industry and commerce to a region of flourishing artistic and cultural life is important? Will he congratulate Northern Arts on its efforts in that direction, but take note of the fact that, irrespective of the moneys granted by the Government, the squeeze that the Government are placing on local authorities is making it difficult for the money to be maintained, let alone increased?

Mr. Channon: I visited Northern Arts some months ago. I congratulate it on what it does in the Northern region. I recognise that there is considerable enthusiasm for the arts in that region and elsewhere. As I said earlier, Northern Arts is receiving a grant that is well above the rate of inflation. That is not true of many bodies in the country at present.

British Railways (National Heritage Memorial Fund)

Mr. Adley: asked the Secretary of State for Education and Science if the national heritage memorial

fund is available for use by British Railways for structures in its ownership and in current use; and if he will make a statement.

Mr. Channon: I doubt whether this would be an appropriate use of the national heritage fund's money, but, as my hon. Friend knows, a railway preservation society could be eligible for such assistance.

Mr. Adley: Is my right hon. Friend aware of the alleged plight of the architecturally outstanding Ribblehead viaduct on the Settle to Carlisle line, which was the subject of an Adjournment debate initiated by my hon. Friend the Member for Skipton (Mr. Watson) and which prompted even the Chief Whip to take part? Will my right hon. Friend look at that debate and the comments of the Under-Secretary of State for Transport? Having done so, will he reconsider his answer and, if he thinks it appropriate, contact his ministerial colleague and let me or him know whether money from the fund will be available for that architecturally important structure?

Mr. Channon: In view of what my hon. Friend says, I shall study what must have been an interesting and unusual debate. I shall write to him as soon as I have had the opportunity to study it.

Mr. Faulds: With trepidation, may I correct the Minister? In Committee on the National Heritage Bill we purposely threw the net wide. May I suggest that the Minister is a little peremptory in saying that railway mementos, such as the one mentioned by the hon. Member for Christchurch and Lymington (Mr. Adley), do not come within the purview of the Act?

Mr. Channon: When the hon. Gentleman studies what I have said, he will find that I did not say that. I said that I doubted whether it would be an appropriate use of the fund to make it available for use by British Rail. However, I shall read the debate.

Mr. Cormack: Is my right hon. Friend aware that the historic buildings councils give money for the preservation of such structures from time to time? Therefore, will he try to ensure that the memorial fund operates similarly?

Mr. Channon: I take note of the views expressed on both sides of the House. I shall look into the matter.

National Theatre

Mr. Hannam: asked the Secretary of State for Education and Science if he will safeguard the future of the National Theatre in the event of a withdrawal of financial support by the Greater London Council.

Mr. Channon: I very much hope that this situation will not arise. Clearly the National Theatre must be put in a position to continue its work.

Mr. Hannam: Does my right hon. Friend agree that the Greater London Council's proposals for the withdrawal of financial support from all centres of excellence represents the silly, daft Socialist dogma that rules in County Hall? Is he aware that nearly 5 million visitors have attended the National Theatre since it opened? Is that not evidence of the widespread support that the theatre receives from all walks of life?

Mr. Channon: Yes, I think that there is clear evidence in the figures that my hon. Friend gives of the widespread


support for and interest in the National Theatre by people from all parts of England, and in particular, of course, from London. The Arts Council and the GLC are continuing discussions. I very much hope that the GLC will maintain its present funding arrangements in the coming financial year.

Mr. Christopher Price: Will the Minister repudiate words such as "silly, daft Socialist dogma" from his side of the House so that he may not be accused of silly, daft Conservative dogma in sacking the deputy chairman of the Arts Council, Mr. Richard Hoggart?

Mr. Channon: I assure the hon. Gentleman that I was guilty of neither silliness nor dogma on that occasion. All that happened was that a person who would otherwise have served for 10 years on the Arts Council—an almost unprecedented stint—will not do so. I believe that it is a privilege to serve on the Arts Council and that occasionally it is right to make some changes.

Mr. Cormack: In view of the new interest in the performing arts shown by the Leader of the Opposition, 

will my right hon. Friend ask him to have a word with Mr. Tony Banks to ensure that he does not do irreparable damage to this great national institution?

Mr. Channon: I am sure that the Leader of the Opposition can look after himself.

Mr. Faulds: My right hon. Friend may be able to look after himself, but I intend to help him. Anyone who has the privilege of knowing the Leader of the Opposition knows that that kind of silly, snide comment is nonsensical rubbish. However, I rose to make a quieter, more temperate comment.
Does the Minister not agree that if the GLC abdicates its responsibility for the National Theatre, the Government will have to step in and fund the National Theatre's operations to keep the great enterprise working properly and healthily?

Mr. Channon: I very much hope that both the hon. Gentleman and the Leader of the Opposition will use their influence with the Socialist majority on the GLC to ensure that such a state of affairs does not arise.

Invergordon Smelter

The Secretary of State for Scotland (Mr. George Younger): Mr. Speaker, with permission, I wish to make a statement about the closure of the British Aluminium Company's smelter at Invergordon.
Towards the end of last year, the company told the Government that the very large losses that it was incurring at Invergordon had reached the point at which the survival of the whole group was seriously and immediately threatened; it was therefore proposing to close the smelter by the end of 1981. The Government nevertheless decided that our first priority should be to try to keep the smelter in operation, and urgent discussions took place with the company in search of a basis on which the smelter could continue.
To enable the smelter to continue in operation, the company would have required the disputed charges of £47 million due to the North of Scotland Hydro-Electric Board to be written off and electricity charges to be reduced to a level which would have caused the board to make annual losses on the power contract of about £16 million per year, continuing at that level and possibly increasing until the year 2000. The Government therefore concluded with great reluctance that such commitments in respect of one company would be an unacceptable burden to the taxpayer and that the closure would have to proceed. The company then entered into discussions with the board about the termination of its power contract. Because these discussions were still in progress, the Government were not in a position to make any annoucement to the House before the beginning of the recess.
Under the terms of the settlement reached between the company and the board, the company's rights under the contract to electricity supplies from Hunterston B to the year 2000 were valued at £79·328 million. From this sum, the board deducted £47·049 million in settlement of disputed power charges. At the date of termination of the contract, the outstanding balance of the Government loans to the company, including interest due, totalled £33·527 million. Because it was the Government's intention that there should be an eqitable settlement which would reduce the threat to the company's other activities caused by the continuing losses at the smelter, my right hon. Friend the Secretary of State for Industry did not insist, as he was entitled to do, that the whole of the remainder should go towards repayment of the outstanding balances of the company's loans. Of the remaining £32·279 million, the company paid £4·488 million to the board in respect of current debts for electricity supplied and £12·279 million to my right hon. Friend in part repayment of the loan, and received £15·512 million.
The payment of £12·279 million was sufficient to repay the principal and interest of the 1975 loan in full, which was £6·547 million, and the interest due and part of the principal of the 1968 loan, which was £5·732 million. With the approval of the Treasury, the remainder of the principal of the 1968 loan, amounting to £21·248 million, was waived. The European Commission is being notified.
As I said on the day that the closure was announced, the Government regard it as a profound disaster for the area. We fully understand the serious consequences that

it will have for Invergordon and the wider Moray Firth area, both in terms of jobs lost and in its effect on the local economy.
The company has undertaken to maintain the smelter in a usable condition for a period of six months and to co-operate with the Highlands and Islands Development Board in its efforts to find a new operator for the plant. We are already working with the Highlands and Islands Development Board and Locate in Scotland to ensure that every effort is being made to find a new operator. We are ready to assist the North of Scotland Hydro-Electric Board and any potential new operator in their negotiations.
In the event that no new operator comes forward, every effort will be made to try to attract new jobs to the area. The Government have agreed to provide a special extra allocation of funds, amounting up to £10 million over the next three years, to enable the Highlands and Islands Development Board to undertake special measures to provide new employment opportunities. My Department, the Highlands and Islands Development Board and the Scottish Development Agency will give the highest priority to finding new projects which may be established in the area.

Mr. Bruce Millan: I am glad that the Secretary of State has made the statement, but we shall of course require a full debate on the matter urgently. I shall return to that later.
Is the Secretary of State aware that, although we in Scotland are inured to redundancy announcements, I do not recollect anything so insensitive and indeed brutal as the announcement on 29 December that at 48 hours' notice the whole smelting operation would be closed down. As the Secretary of State acknowledged, the effect upon the area will be devasting and will go far beyond the 890 jobs directly involved. At least 1,500 jobs will be involved, and there are implications for the rest of Scotland as well.
We require to know far more about the negotiations which took place. In view of the major consequences of the closure, was the Secretary of State personally involved? What exactly was offered to the company? Even today, in its latest statement, the company contradicts certain statements already made by the Secretary of State. What did the Government get out of the negotiations? So far as I can see, the company obtained everything that it wanted and the Government got absolutely nothing. Why was the £21 million given to the company as a kind of sweetener to allow it to close the smelter? That was not legally necessary. Why was it given, and what did the Government get in return? The smelter was not kept open. The Government received no assurances on the other Scottish operations, as within a few days the company was talking about a threat to Falkirk. Nor have they achieved any kind of understanding about the sale value of the plant should a new operator be found.
Is the Secretary of State aware that giving £10 million to the Highlands and Islands Development Board over three years has already struck an extremely sour note in the area when one considers the jobs that have also been lost there as a result of the abandonment of the gas gathering pipeline? If we are to do anything for the area, we need a new contract and a new operator, a break-up value of the plant offered to the new operator and a new power contract which inevitably must be more favourable than that offered to British Aluminium, so it will ultimately cost the Government subsidies in any event. Indeed, is the


Secretary of State aware that some of the statements about subsidies are highly misleading, given that the other two aluminium smelters in the United Kingdom—at Anglesey and in the North of England—are also heavily, but not openly, subsidised? If the fine words of the Secretary of State are to mean anything, the Government will have to come up with something far better in the way of a new power contract than they have so far been willing to offer.
The workers at Invergordon have not accepted this closure and nor have the Labour Opposition. We shall make every effort to get the smelter reopened.

Mr. Younger: I entirely agree with the right hon. Gentleman about the effect of the announcement being made so near to the new year. However, the right hon. Gentleman must realise that the survival of the rest of British Aluminium, with no fewer than 2,700 jobs throughout Scotland, was at stake.
The closure could have been announced earlier had the Government not made such vast efforts to find a way to keep the smelter going. The right hon. Gentleman has to live with that fact.
The right hon. Gentleman asked whether I was involved with the negotiations. I certainly was. I begin to wonder whether I was involved in anything else in December, so thoroughly was I involved in the whole thing.
As to how much was offered, we can look again at the joint statement made by Mr. Utiger of British Aluminium and my hon. Friend the Minister responsible for industry and education at the Scottish Office in early January when it was made clear that what was discussed was a break clause after three years, but the company felt that that was not a sufficiently long period for it to carry on operations of the smelter.
The right hon. Gentleman asked what the Government got. We got a chance of saving the rest of British Aluminium's operations. That is important not only to the Government but to many others in Scotland. The same answer can be given to the right hon. Gentleman's question about why the £21 million was left with the company. As I said in my statement, it was open to my right hon. Friend the Secretary of State for Industry to demand full repayment of the loan outstanding from the Government to the company. However, my right hon. Friend decided that to do so would be to put at risk all the other jobs in British Aluminium throughout Scotland. My right hon. Friend was right to take mat step and, if the right hon. Gentleman thinks otherwise, I hope that he will say that he thinks that the money should have been demanded and that the risk to other jobs was acceptable.
The £10 million to the Highlands and Islands Development Board is a considerable sum when compared with its annual budget—the right hon. Gentleman will know that. Our top priority is the same as that of the right hon. Gentleman. We wish, if at all possible, to find a new operator who wishes to carry on running the smelter. As I have made clear, we shall be willing to help in any way we can to negotiate a new power contract with such an operator.
Although the other smelters in the United Kingdom have all been started off on the same basis as the Invergordon smelter, they are at different stages of their contracts and they have different contracts.

Mr. Robert Maclennan: Have the Government a company, or companies, in mind with which they are prepared to enter into genuine negotiations—

Mr. Dennis Skinner: Genuine? What, with Bill Rogers?

Mr. Maclennan: —to resecure the 15,000 jobs in the smelter and associated industries and—[Interruption.]

Mr. Speaker: Order. It is most unfair for an hon. Member trying to address the House to be interrupted by hon. Members sitting next to him. It is not only unfair. The hon. Member who is interrupting now would not like to be interrupted himself.

Mr. Michael English: My hon. Friend accused someone of not being genuine.

Mr. Younger: Yes, I can assure the hon. Gentleman that, if any other operator can be found to operate the smelter, we shall enter into any negotiations that we can and will be genuine about the whole thing. The hon. Gentleman must be aware that we are searching all over the world for someone willing to operate the smelter. It is too early yet to say what success we have had.

Sir Hector Monro: Does the Secretary of State agree that my hon. Friend the Member for Ross and Cromarty (Mr. Gray) has had great success in attracting industry to Invergordon and has done everything possible to help his constituents in the plight in which they have been placed by British Aluminium? Will the Secretary of State confirm that all Government Departments and the Highland and Islands Development Boards will make every effort to process applications for small businesses in the area as quickly as possible, because time is all important?

Mr. Younger: My Department will do everything it can to help all businesses in the area, particularly small ones, and will process any applications as quickly as possible.
I entirely agree with my hon. Friend's comments about the Minister of State, Department of Energy. Not only has he done a great deal in the past for his constituency, but he was closely involved in doing everything possible to find a way of keeping the Invergorden smelter open during negotiations in December, and I am very grateful to him.

Mr. J. Grimond: Has the Secretary of State read the letter in The Times of 13 January from the chairman of the Highlands and Islands Development Board in which he blames this closure upon the Hydro-Electric Board and alleges that, were the Hydro-Electric Board responsible for supplying electricity to Kinlochleven and Fort William, they too would be closed? He further says that had more hydro-generated electricity been made available, this smelter would still be open. Will the right hon. Gentleman comment on that? Under what arrangements is fuel supplied to other smelters outside Scotland? Will the right hon. Gentleman persuade the Government now to abandon their policy of deliberately dear energy, to the handicap of British industry, when we are one of the two countries in Europe which are self-sufficient in energy?

Mr. Younger: I noticed that letter about the hydro board and its role in this matter. The hydro board has been doing its best to operate the contract that, with its


agreement, was laid down as long ago as 1968. I do not think that the hydro board could have done more than it did to try to help the company to keep going and, indeed, to operate the old contract in the way that it was designed to operate.
The old contract was based upon the ownership by British Aluminium of approximately 20 per cent. of the value of the Hunterston B nuclear power station. I understand that at the time when the contract was negotiated it was thought that in due course nuclear power would become cheaper than hydro-electric power. As the right hon. Gentleman will know, that has not happened, and we must go into that when looking at the lessons to be learnt from this contract.
The right hon. Gentleman also asked about fuel supplies to other smelters. At present, the Anglesey smelter is on an interim arrangement awaiting the completion of Dungeness B, but the negotiation of its power supplies was not on quite the same basis as the Invergordon smelter, and it is at an earlier stage in the arrangements. The other smelter at Lynemouth has a coal source and that is subject to individual negotiation with the Coal Board.
We must get the question of more expensive power into perspective. We should bear in mind that the old contract price of the power to the Invergordon smelter was just a little more than half the price that other industries throughout Scotland were paying for power. The negotiations we had with the company envisaged a price considerably less than that. Therefore, no one can say that this is exceptionally expensive power in relation to other industries.

Several hon. Members: rose—

Mr. Speaker: Order. I propose to allow another 20 minutes on this statement. I hope that both questions and answers will be as brief as possible, because another important statement is to follow.

Mr. Albert McQuarrie: Like the right hon. Member for Glasgow, Craigton (Mr. Millan), all Scottish Members wish to see this smelter restarted and will give every support to any action that is taken to achieve that. Does my right hon. Friend agree that the £20 million retained by, British Aluminium was designed to ensure that at this stage at least the jobs at the other plants, particularly in Falkirk, would be retained, and that the £16 million—

Hon. Members: Too long.

Mr. Speaker: Order.

Mr. McQuarrie: —and that the £16 million that my right hon. Friend agreed would be permitted for three years would have been equal to £17,000 per man per job for that period?

Mr. Speaker: Order. I appealed for brevity. I realise that the hon. Gentleman's supplementary might constitute brevity in his part of the world, but he ought to try to do better.

Mr. Younger: I am grateful to my hon. Friend for his support also for the primary aim, which must be to try to find a way of restarting the smelting operations. I can confirm that, without the deal that was made with the company on the smelter, there is no doubt that all the other jobs in British Aluminium throughout Scotland would have been in the gravest danger long before now.
I confirm that the £16 million that was discussed with regard to future contracts would have amounted to approximately £16,000 to £17,000 per job created, which is an astronomical sum by any calculation.

Mr. Neil Carmichael: The Secretary of State said that he had been doing little else during December but dealing with the smelter. Does he not agree that there is something very wrong with our industrial relations when he, the company, the electricity board and the Government were all involved in these discussions and the last people to know about them were those who were working for the company? Does not that teach us some lessons for the future? Surely there could have been nothing so secret about the discussions that those whose livelihoods depended upon their outcome should not have been consulted.

Mr. Younger: I appreciate what the hon. Gentleman says, but the timing of the announcement was entirely a matter for the company. It was its decision when and how to make the announcement, with a view to all the considerations that had to be taken into account. The hon. Gentleman may agree, on reflection, that there is a difficult balance as to when it is best to make an announcement that is bound to create uncertainty. If one has to make such a difficult announcement, it is better to give it such clarity that those who hear it can understand clearly what is to happen. A half-baked announcement is worse than no announcement.

Mr. John Corrie: If the unit closes, what will be the effect on consumer prices in Scotland? I understand that it took about 7 per cent. of the electricity in Scotland, so will prices rise?

Mr. Younger: Not necessarily, because, when the overall load of electricity is reduced, the most expensive plant producing electricity will go out of operation. One could take the view that the remaining electricity would be produced marginally more cheaply. Nevertheless, it is a great disaster to lose about 7 per cent. of the total output of the joint electricity boards in Scotland. That cannot be good, for either the electricity boards or anyone else.

Mr. Dennis Canavan: Will the Secretary of State admit that either he was conned by British Aluminium or, even worse, he collaborated with it to ensure that the company, financed with public money, walked away with over £20 million profit while the work force, without any consultation, was thrown on the dole queue and cheated out of earnings-related supplement? Will the Secretary of State give us a categorical assurance that he will not allow British Aluminium to indulge in any further asset stripping at Invergordon? Will he take immediate steps to reopen the smelter, even if it means taking it into public ownership and running it as a public enterprise, with a new power contract from the electricity board?

Mr. Younger: The company has assured me that it will be entirely helpful over the future of the buildings, plant and machinery. As I said in my statement, it has already undertaken to keep the plant in a usable condition for at least six months in the hope that another operator will come forward.
I was amazed to hear the hon. Gentleman of all people say what he did. I am sure that he must have many constituents whose jobs directly depend on the British


Aluminium plant in Falkirk, which was at least taken into account and has some chance of carrying on, whereas previously it would have been closed before now. I should have thought that the hon. Gentleman would at least have said "Thank you" for that.

Mr. Alex Pollock: Is my right hon. Friend aware that the ramifications of this smelter closure are already being felt elsewhere in the Highlands including in my constituency where a leading engineering company has had to lay off its specialist work force? Will he therefore confirm that the Government fully appreciate the need to find an urgent solution to help this beleaguered Scottish work force? Will he maintain all possible pressure on British Aluminium to co-operate as fully as possible in attempts to find a prospective purchaser?

Mr. Younger: I share my hon. Friend's concern. One of the worst features of the closure is the effect on other businesses in the area. I am sorry to know that at least one company in my hon. Friend's constituency is affected. I assure him that the Government will do everything possible to encourage the main objective, which must be to find a way of getting the smelter into operation again.

Mr. William Hamilton: Does the Secretary of State appreciate that the Scottish people will not understand how a big company such as this can sack thousands of people and get away with £15½ million worth of loot? Does he understand the difficulties of local authorities in the area, which provided the infrastructure, such as housing and education? How does he propose to compensate them for that loss? Is this not an outstanding example of the crass stupidity of the Government?

Mr. Younger: The hon. Gentleman is less than realistic in his remarks. He knows from what I have said already, and I should have thought that he would know from the press if not from that, that, if the Government had refused to make any arrangements with British Aluminium, in all probability it would have collapsed and all the jobs in it throughout Scotland would have been lost. I very much doubt whether he would have supported me if I had taken that attitude. My hon. Friend the Minister responsible for industry and education at the Scottish Office has already had talks with some local authorities and we shall keep in contact with them on their problems as a result of the closure.

Mr. David Myles: Does my right hon. Friend agree that, with the benefit of hindsight, which is always useful, the forecasts that were made about the viability of the smelter project in Invergordon in 1968 were hopelessly optimistic? Will he ensure that this tragic mistake is not repeated?

Mr Younger: I agree with my hon. Friend that, with hindsight, it appears that many optimistic assumptions were made in 1968. At the end of the day, they have not done anyone any good. I hope that that is one of the lessons that we can learn from this tragic affair.

Mr. Alex Eadie: Will the Secretary of State confirm that British Aluminium went to Invergordon of its own volition? If it had not gone to Invergordon, two other companies would have gone in any case.

Mr. Younger: I gather that that is so. British Aluminium decided to go there of its own volition. I

understand—it is not for me to confirm—that it was informed at that time that the Government's advice was that nuclear power would become progressively cheaper and would become cheaper than hydro-electric power at a break-even point during the contract.

Mr. Barry Henderson: I welcome the Government's efforts to find another operator for this smelter, but will my right hon. Friend ensure that any arrangements that are made are better thought out and better controlled afterwards than the original deal that was made in 1968 which has come to this sad end and which has cost the taxpayer—perhaps my right hon. Friend can tell the House how many hundreds of millions of pounds?

Mr. Younger: I appreciate my hon. Friend's comments and when we discuss a new contract, as I hope we shall, I hope that we shall do better about staying power than we did with the old contract. It has cost well over £100 million already in the form of public subsidy and would have cost much more if it had gone on.

Mr. Dick Douglas: Is the Secretary of State aware that the House considers it completely inadequate that the Government were given six weeks' notice by the company of its intention? Will the Secretary of State give the House an indication of the knock-on effect on other parts of Scottish industry? He is already on record as saying that there is a probablility that it will involve two to four pit closures and the possibility of power station closures. What are the job effects of that in view of the fact that the Secretary of State has no guarantee from British Aluminium on the complete security of other jobs in Scotland?

Mr. Younger: I have no guarantee for the complete security of other jobs, but I have a guarantee that, if the Government had not been prepared to enter into negotiations in December, they would all have gone by now. I hope that at least that can be regarded as something worth having. I agree with the hon. Gentleman that to give six weeks' notice of such a traumatic event was highly undesirable. I should have liked more notice, but I had to deal with what was presented. There are indeed effects on other industries, and there will be some effects on the coal industry. The Government are considering how best they can mitigate those effects.

Mr. Keith Best: While I appreciate that my right hon. Friend said that the circumstances confronting the Invergordon smelter were different from those at Anglesey Aluminium in my constituency, will he acknowledge that recent reports have established beyond peradventure that our larger energy consumers are paying more for their electricity than are their European counterparts? Will he have discussions with his Cabinet colleagues—I am gland to see that my right hon. Friends the Secretaries of State for Wales and Energy are on the Front Bench with him—to see what can be done to try to succour similar industries? My right hon. Friend mentioned earlier that it had been discovered that nuclear power was not as cheap as was once predicted. Does he agree that the last people who should suffer as a result of that are those such as Anglesey Aluminium which have set up in areas of high unemployment to provide bright prospects? Does my right hon. Friend also agree—?

Mr. Speaker: Order. The Welsh take longer than the Scots.

Mr. Younger: I appreciate my hon. Friend's anxiety about the smelter in Anglesey. That is not directly affected by my statement, but I note what he says. Power prices are a matter for my right hon. Friend the Secretary of State for Energy and no doubt my hon. Friend will pursue him on that. It is worth pointing out that the Invergordon smelter—and I think that the Anglesey smelter is in a similar position—was already getting power at about half the cost charged to other industries. It is a different situation from power prices generally.

Several Hon. Members: rose—

Mr. Speaker: Order. I intend to use the remaining time for those who have been seeking to catch my eye.

Dr. Jeremy Bray: What will be the impact of the settlement that the Secretary of State has reached on other electricity consumers in Scotland? Is it fair for Scottish consumers to pay such a large proportion of the cost of carrying spare electricity capacity in the United Kingdom as a whole?

Mr. Younger: It does not quite look like that from the electricity boards' point of view, because it is to Scotland's advantage to be able to sell electricity to other parts of the United Kingdom. That helps the finances of the Scottish boards.
Scotland benefits from the fact that a considerable proportion of our electricity is produced by hydro-electric power, which is very much cheaper than other forms of power. Despite all that I have said about nuclear power, it is considerably cheaper than coal, oil or gas.

Mr. George Foulkes: Will the Secretary of State stop talking about the closure as though it were caused by someone from Mars and accept that it is a direct result of Government economic policy? Is he aware that in the three months to the end of November we imported £61 million of worked aluminium and aluminium alloy, £11½million of which was from East Germany? Is it right that we should import so much subsidised aluminium while Invergordon starves? What action will he take about that aspect?

Mr. Younger: The hon. Gentleman is absolutely right in saying that the situation is due to Government economic policy. That policy was carried out in 1968 and it led to the contract which has resulted in the present sad and disastrous position. On power prices, which lie behind the hon. Gentleman's remarks, the power contract that the company was operating, and on which it made a loss in every year except one, was already very much cheaper than those for other users. Imports are a matter for the aluminium industry to decide when considering how best to operate its affairs to keep all plants in operation. It should be borne in mind that the company still has 2,700 other jobs in Scotland, let alone those in England. Those people are still working and if the company had collapsed, they would all be out of work.

Mr. Gavin Strang: Does the Secretary of State understand that this is the most disgusting and disastrous decision ever taken by the Government? It is socially and economically indefensible. Will he and the Secretary of State for Energy stop their pretence of scouring the world and face up to the fact that, if the Government decided to bring forward a revised power contract, the smelter could start up again next

month? That decision is not only crucial to the Highlands, but vital to the future of the Scottish electricity and coal industries.

Mr. Younger: I am not certain what decision the hon. Gentleman is talking about. The company made the decision, on the basis of its own operations, that it could not continue to operate the smelter and that if it did so there was a danger of bringing down the entire company. The Government decided to do everything in their power to keep the smelter in operation and only when the cost reached an astronomic level—I think that everyone would agree that the cost was astronomic—did the Government decide reluctantly that the smelter had to be allowed to close. If that is the decision to which the hon. Gentleman refers, I stand by it and I have no doubt that any other responsible Government would have taken much the same decision.

Mr. John Home Robertson: Will the right hon. Gentleman tell the House a little more about the likely impact of the closure on the electricity supply industry in the south of Scotland? As he appears to have allowed the Hunterston B reactor to become semi-redundant, what future is there for the Torness power station, which is under construction in my constituency? Is there any threat to efficient coal-burning stations in Scotland?

Mr. Younger: The Torness power station is required in any case because, when it is completed, it will produce some of the cheapest electricity available in Scotland to help Scottish consumers have cheap prices. I am sure that the hon. Gentleman agrees that those who advocate a halt to the Torness power station are proposing a disastrous course which would result in the immediate loss of 1,800 jobs.

Mr. Ron Brown: Is it not clear that the Government are presiding over the de-industrialisation of Scotland and are encouraging a new Highland clearance? Clearly, the answer to class parliamentary democracy is that a sit-in must take place and, indeed, it is taking place. Does not the Secretary of State accept that workers in Scotland and England will increasingly be forced to take such neasures to defend their living standards and their jobs? If the right hon. Gentleman does not understand that, he should not be in office.

Mr. Younger: I congratulate the hon. Gentleman on asking a question containing more slogans than I have heard for a long time.

Mr. Ron Brown: Not slogans, reality.

Mr. Younger: I thought that the hon. Gentleman might have appreciated by now that, if a company is trying to make aluminium and is losing so much money that there is a threat of the whole company being brought down, no amount of sit-ins or slogans will alter that fact. The Government tried to make possible a way of keeping the smelter open and only when the cost reached an astronomic level were the Government forced to conclude that it had to close.

Mr. Harry Ewing: The Secretary of State said that he had been involved in the discussions. How often did he meet the chairman and senior management of British Aluminium during the negotiations? We are anxious to know whom he met and when.
The right hon. Gentleman made great play of the fact that he received assurances about Falkirk. Did it surprise him that no sooner had he made his announcement on 29 December than Mr. Dick Charles of the company went on record as saying that there was no security at Falkirk and that, unless that plant was in the black by June this year, he would close that as well? Is there not a serious risk that the Secretary of State will finish up with the closure of Invergordon and fairly substantial job losses at Falkirk, in my constituency?
Is it not the case that the timing of the announcement had nothing to do with the Government's intention to try to keep the smelter open and everything to do with depriving the workers at Invergordon of their earnings-related supplement? Will the right hon. Gentleman confirm that, because of the timing of the announcement, not one redundant worker from Invergordon will qualify for earnings-related supplement?

Mr. Younger: Not only did I meet Mr. Utiger two or three times, but I spoke to him on the telephone and I met some of the directors of Tube Investments, including Lord Plowden, which has a shareholding in British Aluminium. My officials consulted the company's representatives over many days and weeks and for much of the time early December. The hon. Gentleman can be satisfied on that aspect.
I hear that there have been some negotiations at Falkirk about viability. Obviously, that is important, but I hope that the hon. Gentleman understands that, if the Government had not managed to make a settlement with the company before 31 December, all his constituents would almost certainly have lost their jobs then. I very much hope that the new arrangements that the company is negotiating with the workers at Falkirk will lead to work and jobs continuing there. That was one of our main objectives in trying to meet the company's requirement of getting a settlement before the end of its financial year.
Of course, it would have been far better for the announcement to have been made at almost any other time of the year, but, as I have explained, as the company's financial year ended on 31 December and its viability and survival depended on a deal being agreed by then, it was essential to do it quickly and at that time. The hon. Gentleman represents the people of Falkirk and he should at least be grateful that his constituents' jobs have been saved.

London Transport

The Secretary of State for Transport (Mr. David Howell): Before Christmas I told the House that I was not prepared to legislate to let the Greater London Council go back to its unbalanced transport policies which placed such huge burdens on ratepayers. I said, however, that I was willing to see the GLC leader at any time if he or his supporters had problems. Since then Mr. Livingstone and other GLC leaders have come to see me and explain their problems.
In immediate response to those problems the Government are prepared to act in two respects. First, although the GLC has powers under the Local Government Act 1972 to spend up to the product of a 2p rate, which could be used to finance concessionary fares for the elderly, it is clear that it is not in a position to continue relying on those powers alone for this purpose; nor are the London boroughs able to get a concessionary fares scheme worked up in time. I have therefore stated the Government's willingness to legislate to give to the GLC the same powers as other local authorities have to operate a concessionary fares scheme.
Secondly, the high cost and low fares policies of recent months have led to a large accumulated deficit. I have said that we would be prepared to legislate to let London Transport pay this off over a reasonable period. Regrettably, the GLC has had to raise fares 100 per cent., not just to get back to 1980 levels, but to pay for the heavy costs of ineffeciencies imposed on London Transport in recent months. In the Government's view there is no need for further large increases in 1982. Talk of this, or of large-scale redundancies, is raising thoroughly unnecessary alarm. The GLC leaders have indicated their wish to come for further talks on the future of London's transport system in the longer term. I welcome these as providing an opportunity for constructive discussions on the needs of the public in London and how these can be best met and financed.

Mr. Albert Booth: I welcome the Secretary of State's acknowledgement that it is necessary to legislate to deal with the massive problem created by a combination of the Lords' decision, the decision of his predecessor about fares policy, and the decision of the Secretary of State for the Environment to cut London's rate support grant. However, does he realise that most of the people who are concerned with this issue will regard his statement as inadequate to meet the problem? Does he accept that legislation is required to enable not only the Greater London Council but metropolitan authorities throughout the country, to continue sensible transport policies as a result of the Lords' decision? Does he further accept that legislation is required to prevent a 100 per cent. increase in fares and a 5 per cent. cut in services in London?
Will the right hon. Gentleman give the House a clear assurance that, as the Secretary of State for the Environment cut £110 million off London's rate support grant on the ground that its fares policy involved overspending, when the Greater London Council brings in the new fares policy involving a 100 per cent. increase in fares the Secretary of State for the Environment will restore that £110 million to the GLC? Will he also give us


a clear assurance that if the GLC—as I understand is its intention—operates the legal powers which he intends to confer upon it to provide from rates a fares concession for elderly people, that will not be held to be an increase in rates expenditure and thereby attract a further penalty from his right hon. Friend the Secretary of State for the Environment?
Can the Secretary of State for Transport give an estimate of how much extra it will cost London ratepayers to provide this concessionary travel arrangement for the elderly as a result of the increase in fares that has been forced upon them? Can he say how the fares requirement will be calculated for the repayment of the loan, in view of the fact that no one has any experience of the effect of a 100 per cent. fares increase and the drop in ridership that might result from that?
Finally, can he say how quickly this legislation will be introduced, bearing in mind that councils will have to take decisions within the next few weeks about their transport budgets for the coming year?

Mr. Howell: The right hon. Member for Barrow-in-Furness (Mr. Booth) has asked me a number of Questions. I begin by reiterating that, as I said before Christmas, it remains the intention of the Government not to propose legislation that would allow the GLC to go on crushing the ratepayers. If I may say so, it was surprising that the right hon. Gentleman omitted to express any sympathy for the plight of the ratepayers, or the fact that many of them were elderly people who were frightened by some of the enormous rate increases that were proposed.
I shall try to answer as many of the right hon. Gentleman's questions as I can. The 100 per cent. fares increase which the GLC approved is regrettable. It appears to be necessary in order to finance nor merely getting back to the policy on fares that prevailed before May 1981 and getting some sability and balance between the ratepayers and the fare payers, but the substantial increases in costs that have resulted from the GLC's extremely cavalier attitude to the operations of London Transport in recent months. That is why this regrettable and deployable 100 per cent. increase appears to be necessary.
The right hon. Gentleman asked about the GLC's expenditure budget generally, the penalties that might be incurred and whether money would come back to the London boroughs. These are matters for my right hon. Friend, but the answer is that some money will come back.
The right hon. Gentleman asked whether the rates penalty will be incurred if the GLC proceeds, for instance, with its concessionary fares policy. This relates to the GLC's expenditure priorities. The GLC has to decide its priorities and expenditure in a way that maximises efficiency and is consistent with the overall public expenditure constraints. That is a matter for the GLC, as is the question that the right hon. Gentleman asked about the extra cost to ratepayers. In prompt response to the GLC's request, as I said I would do, I have offered two ways in which the GLC can proceed and make a budget for 1982 with London Transport which is legal and which enables it to proceed in 1982 in a legitimate manner.
The right hon. Gentleman asked about the repayment of the loan that I am offering the GLC. London Transport is to be given powers to borrow over five years. It is for the GLC to decide whether to take up that offer and to what extent to rely on that source of funds. The council may have other sources of funds, in which case the burden will

not fall exclusively on the fare payer. It is for the council to decide how much of that offer it wishes to take up. I am giving the GLC more room for manoeuvre, so that it may proceed in this way, and accept London Transport's suggestion to raise fares to pay off this large and regrettable accumulated deficit over five years.
The speed of legislation will depend upon my right hon. Friend the Leader of the House. The Government wanted to move as soon as possible, particularly on concessionary fares, because I was worried about some of the unnecessary scaremongering talk about the threat to old age pensioners' concessions. There was no need for that scaremongering talk. The Government have acted promptly in making their position clear on the matter.

Several Hon. Members: rose—

Mr. Speaker: Order. I propose to allow 20 minutes for questions on this statement. If hon. Gentlemen are brief, everyone should be called.

Mr. Terence Higgins: I support my right hon. Friend's opposition to a general subsidy on fares arid I agree with him on the need to protect ratepayers. However, is he aware that the present situation is very unfair in the way that it affects concessionary fares for pensioners? Pensioners in London travel free but in many other parts of the country that have elderly populations it is impossible for local authorities to subsidise pensioners' fares because those who are paying the rates are the people who are getting the concessionary fares. Will my right hon. Friend see whether this can be done on a broader, national basis rather than on the present unfair basis, which discriminates in favour of London?

Mr. Howell: I am grateful to my right hon. Friend for his general support. I am aware of the points on concessionary fares that he has made in earlier debates. I should perhaps make it clear that what the Government are proposing is legislation to put the GLC in the same position as practically every other local and metropolitan authority. It would then be for the GLC, like every other local authority, to decide what proportion of its resources it wished to use and the type of policy that it wished to operate on concessionary fares for the old or support for other groups of people. The Government are proposing that the GLC should be put in exactly the same position as almost every other local authority.

Mr. William Pitt: Is the Secretary of State aware that his statement, which moves us no further forward from the House of Lords decision, has thrown the future of London Transport into chaos? Is he further aware that he has put London Transport out on a limb in relation to other capital cities of the West? Will he assure the House that the Government will seek to introduce legislation to promote a properly subsidised transport system in our capital city?

Mr. Howell: The hon. Gentleman is unjustified and unwise to speak about chaos. There is no reason why there should be chaos. There is every reason to suppose that the present situation can be used by the GLC to put London Transport on a fair and balanced footing. There is every reason for future talks involving the GLC and other local authorities to include the more fundamental issues that arise. That is a much better approach than campaigning on the streets. The hon. Gentleman has his own recipe. I can only assume from what he says that he, like everyone else, 


would like to see low fares, low rates and, no doubt, low taxes. There happens, however, to be the question of deciding who pays and, in particular, who pays when a major bungle has been made by the GLC, for which someone has to pick up the tab.

Mr. George Cunningham: Will the Secretary of State accept that in every other major capital city in Europe subsidies are required to save city transport, but that such subsidies are now—at least possibly—illegal in this country? In addition to the temporary legislation that the right hon. Gentleman now offers in respect of the GLC, have the Government any intention of bringing forward legislation later to clarify the situation in regard to such subsidies?

Mr. Howell: The clear legal advice, and the Government's view based on that advice, is that the position for 1982 is within the law if the GLC proceeds with the 100 per cent. fares increase. No more is required by the law. If the GLC wished to put up fares further, that would be a policy matter. As to the longer term, I have recognised that more fundamental problems are raised by what is recognised to be a complex judgment. The GLC has said that it wishes to come to see me again. I shall also be talking to the metropolitan authorities. We shall need to look at some of the difficult issues raised in the longer term. I believe, however, that it would be wrong to be rushed, as some hon. Members were suggesting before Christmas, into early legislation of a kind that would put the clock back and allow the GLC to carry on punishing the ratepayers, as it was doing.

Sir John Biggs-Davison: What increase in paying passengers resulted from cheaper fares?

Mr. Howell: I should need notice in order to give the precise number. I can, however, inform my hon. Friend that some of the claims made for the dramatic reduction in fares, first in South Yorkshire and then in Greater London, have been wholly unjustified. In particular, it was claimed that there would be a dramatic cut in traffic. That has not emerged at all. The GLC's own estimate is that general traffic mileages will be cut only by 1 per cent.

Mr. Douglas Jay: Why did the Secretary of State tell the House before Christmas that old people's concessionary fares were not threatened, when it now turns out that they were and that legislation is needed?

Mr. Howell: In fact, the legisaltion was on the statute book for concessionary fares to continue to be paid out of the 2p rate. When I discussed this problem with the GLC, it was clear that the council was not in a position to rely on the 2p rate to meet the larger sums needed for concessionary fares and that the London boroughs could not go back to the scheme that operated previously. The right hon. Gentleman is therefore right. It was necessary to take the steps that I have taken over concessionary fares.

Mr. Michael Shersby: Is my right hon. Friend satisfied that the legislation that the he intends to introduce will meet the important point raised by our right hon. Friend the Member for Worthing (Mr. Higgins)? What is the Government's policy towards the introduction of concessionary fares for elderly people on a wider basis than that already enjoyed? Can my right hon. Friend give an assurance that any future subsidy for London fares will

not be met by Greater London ratepayers alone, but that those in the Home Counties, who have benefited substantially from the scheme introduced by the GLC, will have to pay their fair share of any future subsidy, whatever form it may take?

Mr. Howell: I listened closely to my right hon. Friend the Member for Worthing (Mr. Higgins) and also to my hon. Friend the Member for Uxbridge (Mr. Shersby) on the matter of concessionary fares, Wider issues arise than the one with which I have been concerned, which is to put the GLC in precisely the same position as all other local authorities and settle concessionary fares on the basis of local requirements and local variations.
On the question of general support for London Transport, it is worth bearing in mind that in the past year national taxpayers gave about £100 million of support to the London Transport system. Overall, the system last year received about £¼ billion in public support before the introduction of the super low fares policy. Considerable sums are therefore available. Against that background it is nonsense to talk of a system starved of resources. A substantial degree of support exists and this has been recognised in Government policies over many years. It continues to be so recognised.

Mr. Christopher Price: Will the Secretary of State accept that the responsibility for the chaos and the scaremongering lies with him, with his right hon. Friend the Secretary of State for the Environment, with the London borough of Bromley and with the five Law Lords who produced such a confused judgment that different Queen's Counsel have produced different interpretations of what that judgment means? Will the right hon. Gentleman confirm what he has said—that even though he is asking the House to legislate to make it lawful for the GLC to give pensioners free fares, he is giving no guarantee that the moment this is done his right hon. Friend will not come forward and penalise the council and say that it is acting unlawfully?

Mr. Howell: On the issue of blame and responsibility, I do not think that the hon. Gentleman has got the matter in perspective. A number of people have said that they intend to campaign for a clearly defined political objective in order to get back to a situation in which they can continue to impose an extremely heavy burden on ratepayers, including many elederly people and many small businesses, which is generally agreed to be extremely damaging. A political campaign is being mounted in a way that seems, in some cases, to be designed to create confusion of a greater kind than I believe is anything like the case. That is a poor way to go about dealing with an undoubteldy complex problem. It would be much better to follow the line suggested by the Government from the start—to sit down, discuss the problems and work them out in a sensible manner.
On the issue of money paid out for old people's concessionary fares, it is for the GLC to decide its expenditure priorities and how it wishes to spend its money. I am proposing that legislation should be sought from the House to enable the GLC to carry on unambiguously with a policy of concessionary fares for the elderly. How the GLC finds the money is a matter for it to work out within its own budget.

Mr. Tim Eggar: Is my right hon. Friend aware that his announcement will be welcomed by


old-age pensioners throughout London? Does he know that many old-age pensioners were extremely upset by the supplementary rate imposed by Mr. Ken Livingstone, which they saw as a nasty and underhand way of forcing them to pay for their free bus passes?

Mr. Howell: I am very much aware of the matters to which my hon. Friend referred. As he said, there have been a number of statements in recent weeks allegedly intended to help the elderly, but which on examination seemed to do nothing but create unnecessary anxieties, which is to be deplored deeply.

Mr. Nigel Spearing: The Secretary of State mentioned the need for a balanced transport policy in London. Does he not agree that the real balance is between the costs of private and public transport, and that it is essential to get it right? If New York has a 55 per cent. fare box ratio, why cannot London? If the right hon. Gentleman wants a balanced policy for the ratepayer, why does he not get his right hon. Friend the Secreatary of State for the Environment to remove his penalties? I remind the right hon. Gentleman that half the supplementary rate did not go to fares at all. It went to pay the penalties imposed by the Secretary of State for the Environment.

Mr. Howell: I am not sure that New York is the happiest example of a transport system. I know that the hon. Gentleman looks at these matters very fairly, but he should not underestimate the considerable amount of support and subsidy going into the London Transport system. In the budget for last year, before the introduction of the low fares system, for every £1 raised in fares, there was a further 55·1p added from public support. That is a considerable degree of subsidy.
Of course there are variations in European capitals. The example of Paris is quoted frequently. However, what is often forgotten is that the Paris system runs a similar passenger mileage with about 60 per cent. of the staff. If we want gains, it is to efficiency of operating and manning that we have to look.

Mr. John Cartwright: Will the right hon. Gentleman accept that the legal advice, like the legal judgment, is anything but clear? Why, therefore, will he not legislate to clarify what is a reasonable balance between the fares income and the essential public subsidy in terms of national public transport, especially in London? Bearing in mind the confused state of London's transport, will the right hon. Gentleman now call together representatives from the GLC, London Transport, British Rail and the transport unions and try to get them working together to provide the efficient and effective public transport system that Londoners need and deserve?

Mr. Howell: The legal advice to the Government, which is the basis of the view being put forward by the Government—a view which I have put forward to the GLC—is very clear. In 1982 the GLC will be within the law and acting legitimately if it approves this regrettably large increase of 100 per cent. in fares, and no further increase is needed.
As for the longer term and the matters to which the hon. Gentleman referred, I agree that some fundamental questions about transport planning are raised by this affair. There is a confederation of interests between the different operators about how best to serve the public need. These are matters that need to be discussed and looked at. But

they are not a basis for rushing into early legislation to put us back into the mess that we were in a couple of months ago.

Mr. Alan Haselhurst: Is my right hon. Friend aware that, as a result of the unsatisfactory position into which the GLC has led us, commuters from outside London are able no longer to purchase combined British Rail and London Transport season tickets on the most advantageous terms and thereby are losing money? Can something be done to compensate them?

Mr. Howell: I note what my hon. Friend says. Obviously this is a matter for the transport authorities concerned. I shall call it to their attention.

Mr. Guy Barnett: The Minister consistently expresses sympathy for London ratepayers. If he has any respect for the responsibility and accountability of local authorities to their electorates, bearing in mine that London ratepayers voted for this policy at the last election, what has this matter to do with him?

Mr. Howell: There is also the question of who pays for it. It was the Government's clear view long before the Lords judgment—and, I suspect, the view of a growing number of people trying to operate the policy—that the dramatic reduction in fares and the general operation imposed on London Transport by the GLC were leading to a chaotic and impossible position for both ratepayers and fare payers. It would be utterly irresponsible of the Government merely to turn back the clock and restore legislation to allow that to continue.

Mr. Teddy Taylor: Is it true, as reported in most newspapers, that the result of my right hon. Friend's discussions with Mr. Livingstone is that the GLC will be given another £65 million to help finance the concessionary fares policy? Is my right hon. Friend aware that if a generous package were given it would cause enormous resentment in places such as Southend where very limited concessions are offered to pensioners because last year we adhered to the Government's guidelines, curtailed our spending and reduced our rates? Would it not be a scandalous policy if there were a cash prize for breaking the rules and a penalty for keeping them?

Mr. Howell: I assure my hon. Friend that the story on which he has commented is untrue. No such proposal has been made. It is proposed that the GLC shall be in a position, by a change in the law to be passed in the House, to continue with concessionary fares. I understand that that would involve a pay out of about £65 million. The story that my hon. Friend has heard is not true, and he can contain his resentment.

Mr. Clinton Davis: Quite deliberately, the Minister has sidestepped two essential issues put to him today by a number of my hon. Friends. The first is that if the GLC operates a concessionary policy it can expect a reduction in the support that it receives from the Government. Secondly, the Minister is misleading the House when he suggests that there is no need for increases in fares in 1982. Is it not clear that the GLC will have to repay the loan, plus interest and that the only way in which it can realistically do that and operate its transport policy is by reducing services, increasing fares and making London's roads more and more open to the use of private motorcars?

Mr. Howell: The repayment of the loan was taken into account by London Transport in the formulation of its budget and in putting forward its 100 per cent. fares increase. There has been no misleading of the House or anyone else about that. It is the Government's firm view, based on clear legal advice, that the 100 per cent. increase, although regrettably large, for the reasons that I gave earlier, is necessary and all that is required for the GLC to stay within the law.
The hon. Gentleman accused me of sidestepping the fact that the GLC would have its grant support reduced if it operated the concessionary policy. The matter with which the leaders of the GLC asked me to concern myself was the powers of the council to operate a concessionary fares policy. They did not ask me to concern myself with the details of the council's budget or with its expenditure priorities. The Government have moved promptly in response to the difficulties into which the GLC has got itself, and I should expect the hon. Gentleman to give a more sympathetic welcome to that move.

Mr. Hal Miller: Can my right hon. Friend confirm what some of us understood him to say just now, that in the matter of concessionary fares for the elderly in London he has agreed only to legislate to put the GLC in the same position as that of other local authorities, and has not given any Government subvention to the GLC for that purpose? It was reported widely in the press that he had given such a subvention. If he has, it will be resented bitterly by people in other parts of the country.

Mr. Howell: I can confirm that the position is exactly that explained by my hon. Friend in his opening sentence.

Mr. Les Huckfield: The right hon. Gentleman said that the intention of his proposed legislation was to bring the Greater London Council into line with local authorities in the provinces. However, will he bear in mind that the legal position relating to the powers of such authorities is equally uncertain? Will the right hon. Gentleman acknowledge that Conservative-controlled local authorities such as Solihull are considering legal action against such authorities as the West Midlands metropolitan county council? Does the right hon. Gentleman not realise that if he really wants to clarify the position he will have to introduce legislation for local authorities outside London as well?

Mr. Howell: The hon. Gentleman is not entirely correct to say that the legal position on concessionary fares is the same for other local authorities. All other local authorities have such a power, and the GLC is unique in not having it at the moment. That is where the Government propose to legislate.
On the broader question of support for public transport systems, I have said that I shall be seeing the Association of Metropolitan Authorities. If metropolitan authorities, or others, have problems that they want to discuss with me, I shall be happy to meet them. The proposals discussed with me so far have been raised by the GLC. The GLC said that it wanted to see me to discuss some problems and the Government responded promptly.

Mr. Speaker: There are two hon. Members on each side of the House still seeking to catch my eye. I shall call them if they will be brief.

Mr. Andrew Faulds: Does the right hon. Gentleman not appreciate, and is he not worried by

the fact, that the Government's position will force the GLC to make cuts in other parts of its budget? One of those cuts may well be the withdrawal of funding of the national arts institutions in London, with all the problems that that will pose for the Government.

Mr. Howell: The hon. Gentleman is tempting me into commenting on the GLC's priorities and its overall budget. I must avoid that, although it strikes me, as an outsider, that there is room for economy and efficiency in a number of the programmes on which it has embarked in the past few months.

Mr. Matthew Parris: Did I correctly understand my right hon. Friend to say that he does not believe that general subsidy of public transport is wrong, but simply that it is possible to go too far? Does he agree that "how much is too much" is a pressing question for many transport undertakings and that we need to give early guidance?

Mr. Howell: My hon. Friend is correct. That position has been reflected over the years in the whole system of transport supplementary grants. The legal position of the GLC in 1982 has now been made clear. If other local authorities and metropolitan authorities have problems that they wish to discuss, I have said that I am ready to see them, although no specific approach has yet been made to me. As I have told the House, I shall shortly be meeting the Association of Metropolitan Authorities, at its request.

Mr. Dennis Skinner: As the Minister seems likely to meet several different authorities, including the various associations, and now that he is presenting legislation with specific reference to free fares for pensioners, will he bear in mind that in large tracts of the country, including most of Derbyshire, no bus undertakings belong to the local authority, or to any part of it?
Will the right hon. Gentleman accept that he may need to meet Derbyshire county council, and many other authorities which do not have their own bus undertakings, so that they can introduce concessionary fares for their old-age pensioners and, if necessary, obtain the treatment—through loans or other means—that he describes for Greater London?

Mr. Howell: I accept that I may need to meet all sorts of people, but I am not sure that the hon. Gentleman's points relate to the GLC and its unique position on concessionary fares.

Mr. Douglas Hogg: Will my right hon. Friend accept that, despite the GLC's antics there is a perfectly respectable case for subsidising local transport, but that there is not a respectable case for requiring local ratepayers to do that, if only because they are relatively few in number? It is a narrow tax base. If we are to have a policy of financing or subsidising local transport undertakings—for which, as I say, there is a good case—does my right hon. Friend agree that we must find a more broadly based local system of taxation and link it to that?

Mr. Howell: My hon. Friend has raised a much wider issue, but he is correct. The Government accept, and have long accepted, the case for a sensible degree of revenue and capital support for local transport undertakings. The problem with the GLC in recent months is that it did not know where to stop.

Mr. Speaker: I have received notice of three applications under Standing Order No. 9. I shall call them in the order in which I received them.

Invergordon Smelter

Mr. Bruce Millan: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely, 
the threatened permanent closure of the British Aluminium smelter at Invergordon and the disasterous employment and other consequences that that would involve in the Highlands and elsewhere.
I need not argue about the specific nature of the subject, Mr. Speaker, because you will have heard this afternoon's statement. It is certainly a very specific matter for the 1,500 or so people who will lose their jobs as a result of the closure of the smelter. However, the matter obviously cannot be allowed to rest on that statement.
I need not emphasise how important the issue is to the area that is directly involved. From my visit to the area last week, I know that there is considerable anger and bitterness about the announcement. The implications go beyond the area concerned and affect the other British Aluminium plants in Scotland and elsewhere.
The matter is important and we need to know exactly what happened during the negotiations between the Government and the company. What happened at Invergordon has important implications for the other two smelters operating in the United Kingdom. As the hon. Member for Anglesey (Mr. Best) pointed out earlier, in Anglesey the charges for power will have to be renegotiated following the commencement of Dungeness nuclear power station. There is another smelter in the North and I understand that the coal price will soon have to be re-negotiated with the National Coal Board. The issue is important because of the general implications for energy policies. It is particularly important because of the effect on the electricity industry and on consumers in Scotland. The loss of no less than 7 per cent. of the total electricity demand is bound to have a considerable effect which will in turn have implications for the coal industry in Scotland. That industry is almost exclusively dependent on the supply of coal for the generation of electricity in Scotland. The matter will also affect the rail industry and the other industries in Scotland.
As regards the urgency of the matter, the closure was announced during the recess and we have already lost three weeks. We might have debated this matter long before now. However, the matter is particularly urgent because the redundancy notices, which were first to be issued a fortnight ago, have been deferred in successive weeks. On the present understanding between the company and the trade unions concerned, those notices will be issued later this week. Therefore, it is extremely important to debate this issue before those notices are issued.
There are important points to be debated and it is essential that those in Scotland, particularly those in the area directly involved, should know exactly what the Government intend to do to reverse the potentially disastrous situation. It is for those reasons that I have sought to raise this Adjournment debate.

Mr. Speaker: The right hon. Member for Glasgow, Craigton (Mr. Millan) asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely, 


the threatened permanent closure of the British Aluminium smelter at Invergordon and the disastrous employment and other consequences that that would involve in the Highlands and elsewhere.
No hon. Member who has been in the Chamber this afternoon will have failed to take note of the serious issues raised in the Minister's statement and in the right hon. Gentleman's application. The House is aware that I do not decide whether this matter—which is of undoubted importance in Scotland—should be debated. My powers are limited to deciding whether there should be a three-hour debate on this important question tonight or tomorrow night. The House has instructed me to give no reason for my decision.
I listened with anxious care to the right hon. Gentleman's representations, but I have to rule that his submission does not fall within the provisions of the Standing Order and, therefore, I cannot submit his application to the House.

Railways (Industrial Action)

Mr. Les Huckfield: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely, 
the failure of the British Railways Board to increase wages for railwaymen, especially footplate staffs, as agreed by the railway staff national tribunal and the Arbitration and Conciliation Service in August 1981 and its industrial consequences and results for the travelling public".
I submit that the issue is specific because it arises from the failure of the British Railways Board to honour an undertaking that it gave to the Arbitration and Conciliation Service last August. There is a large amount of documentary evidence relating thereto. I submit that the issue is important not only because of its consequences on specific days to the travelling public but also to the increasing consequences for industrial customers, especially in the steel industry and others that are now being reported.
Also, the matter should have urgent consideration because, from the statements that are now emanating from the British Railways Board, we can see that it is daily hardening its attitude. If the attitude of the British Railways Board and British Rail management will harden, I forecast that the action and the industrial consequences will also increase.
I submit also that action and intervention by the Secretary of State is warranted. By his inaction and standing on the sidelines thus far, he has not helped. By what he has said while standing on the sidelines, he has helped even less. I hope that we can have a debate under Standing Order No. 9 so that we can have a helpful intervention by the Secretary of State, not least because the position that has been taken by the British Railways Board is basically attributable to the Government's policy. The matter requires intervention and Government action.
Above all—I recognise that I am not entitled to go into the merits of the debate—the House should be given an opportunity to debate and decide such an important issue this week. It is especially important that all hon. Members and the people that they represent should have an opportunity to see the precise facts and figures of the position as soon as possible.

Mr. Speaker: The hon. Member for Nuneaton (Mr. Huckfield) gave me notice before 12 noon today that he would seek leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely, 
the failure of the British Railways Board to increase wages for railwaymen, especially footplate staffs, as agreed by the railway staff national tribunal and the Arbitration and Conciliation Service in August 1981 and its industrial consequences and results for the travelling public".
As the House heard me say in response to the previous application, my powers are very limited. The House knows that an emergency debate is not the only way in which the matter can be debated.
I listened with great care to what the hon. Gentleman said, but I must rule that his submission does not fall within the provisions of the Standing Order and therefore I cannot submit his application to the House.

Mr. Geoffrey Dickens: On a point of order, Mr. Speaker. On an application under Standing Order No. 9, is it not an hon. Member's duty to declare an interest? If that is so, an interest should have been declared by the hon. Member for Nuneaton (Mr. Huckfield).

Mr. Speaker: The House understands that when an application is made under Standing Order No. 9 we listen with care to the arguments advanced. If there is any special interest to be declared, hon. Members usually do so.

Mr. Les Huckfield: Further to that point of order, Mr. Speaker. I am sponsored by the Transport and General Workers Union, but by an arrangement with that union I also speak in the House on behalf of ASLEF. The precise nature of my commitment to ASLEF, which is not a sponsorship, is of course recorded in the Register of Members' Interests.

Heating Costs (Assistance)

Mr. David Winnick: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely, 
the need for the Government to provide adequate assistance for those on limited incomes, especially the elderly, to help to pay fuel bills for heating purposes during the course of this winter.
The matter is specific in that my application deals with the immense difficulties faced by so many people on limited incomes in keeping their accommodation adequately heated and being able at the same time to meet the cost of doing so.
The importance of the matter is self-explanatory, bearing in mind the winter that we are experiencing. The urgency of the matter arises from the danger to so many people, especially the elderly, who, fearing the cost of forthcoming fuel bills, do not have proper heating in their homes. Doctors have warned of the danger to health in such circumstances. We know of hypothermia, which is a condition that kills. It applies especially to the very old and the very young.
The Government have issued guidelines to DHSS offices about some assistance that might be given, but it is not clear how many of those on supplementary benefit can claim. For example, can claimants receive assistance if they have any savings, or must they show that they have no money at all before they can receive assistance towards the cost of their fuel bills?
We should debate the matter because it is of extreme importance. It should also be borne in mind that no help will be given to the many people on limited incomes who are not in receipt of supplementary benefit. For example, there are three-quarters of a million pensioners in Britain who receive rent or rate rebates but do not receive supplementary benefit for various reasons. They will not receive a penny in aid, either this winter or at any other time, in order to pay their fuel bills. The Government must take much of the responsibility for the cost of fuel. The price of gas is rising by 30 per cent.—

Mr. Speaker: Order. The hon. Gentleman is now beginning to debate the issue that he would debate if his application were granted.

Mr. Winnick: The price of gas is rising by 30 per cent. in real terms over three years. I believe that the matter is specific and important to many people that we represent, so it is necessary to have an urgent debate. It is a sick scandal that so many people in the community, especially the elderly, should be depriving themselves of heat and trying to keep warm by wrapping blankets around themselves because they cannot afford fuel. I believe that the matter is important and I hope that my application will be granted.

Mr. Speaker: The hon. Member for Walsall, North (Mr. Winnick) gave me notice before 12 o'clock today that he would seek leave to move the Adjournment of the House under Standing Order No. 9 for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely, 
the need for the Government to provide adequate assistance for those on limited incomes, especially the elderly, to help to pay fuel bills for heating purposes during the course of this winter.


The House will have no doubt about the importance of the issue. I repeat that my powers are limited. I have been instructed by the House to give no reasons for my decision. After listening with considerable concern to the representations of the hon. Gentleman, I must rule that his submission does not fall within the provisions of the Standing Order and therefore I cannot submit his application to the House.

STATUTORY INSTRUMENTS, &c.

Mr. Speaker: By leave of the House, I will put together the two Questions on the motions relating to statutory instruments.

Ordered, 
That the Value Added Tax (Insurance) Order 1981 (S.I., 1981, No. 1740) be referred to a Standing Committee on Statutory Instruments, &amp;c.

That the Value Added Tax (Special Provisions) Order 1981 (S.I., 1981, No. 1741) be referred to a Standing Committee on Statutory Instruments, &amp;c.—[Mr. Pym.]

Orders of the Day — Local Government Finance (No. 2) Bill

Order for Second Reading read.

Mr. Gerald Kaufman: On a point of order, Mr. Speaker. I should be grateful if you would give the House your guidance on a matter relevant to the manner in which we proceed to debate the Second Reading of the Bill.
On the Order Paper is motion No. 132, which by 22 December had been signed by 297 right hon. and hon. Members, calling for the House's approval of the Public Accounts Committee's report on the role of the Comptroller and Auditor General. On 17 December the Prime Minister and the Leader of the House gave a commitment that, in the light of the views expressed in the House in the debate on 13 November, the Chancellor of the Exchequer would make a statement.
One issue raised in the report in chapter 5 is the auditing of local government accounts. The Public Accounts Committee opposes the setting up of an Audit Commission, as proposed in the Bill. Therefore, may we have your guidance on the propriety of the House proceeding to debate the matter in the absence of the promised statement?

Mr. Speaker: The matter can be raised on Second Reading. Orders of the Day have been called. I can make no further comment.

The Lord President of the Council and Leader of the House of Commons (Mr. Francis Pym): My right hon. Friend will refer to the matter during his speech moving the Second Reading of the Bill, and I assure the right hon. Gentleman that my right hon. and learned Friend the Chancellor of the Exchequer will make an announcement about his reaction to the debate on the PAC report in due course. The commitment will be fulfilled. Although that aspect is only a small part of the report, it was touched on by both sides of the House in the debate on the PAC report.

The Secretary of State for the Environment (Mr. Michael Heseltine): I beg to move, That the Bill be now read a Second time.
The Bill does three things. It abolishes supplementary rates and precepts, so that local authorites will have to rate or precept for complete financial years; it enables me to protect from any general loss of grant local authorities which meet their individual spending targets; and it establishes an Audit Commission to supervise the audit of local authorities in England and Wales.
Let me start with the decision to abolish supplementary rates. The House will know that there has recently been a growing tendency for local authorities to levy supplementary rates. In 1981–82 we saw more than 30 local authorities issue either supplementary rates or precepts on their own account. This is far more than ever before.
It has particularly unfortunate consequences, but perhaps the most unfortunate is the effect on those people who try to budget their family income and make allowances within it for their rates payment to local government, only to find that their calculations are thrown


aside by the arrival of an unbudgeted and unwelcome increase in their already increased rate demand. The effect on those with low and fixed incomes is particuarly harsh. Harsh, too, are the effects on industry and commerce in many of our larger cities, where the people who have to pay the supplementary rates simply do not understand when local councillors complain about harsh economic conditions, yet at the same time increase the cost of the public sector and push out supplementary rates to aggravate the problems, particularly of the private sector.
What the House clearly has to face, and what is at the centre of the controversy about so much of local government today, is that parts of local government are determined to scrap the traditional relationship between central Government and local government whereby local government recognised and accepted the right of central Government to set the level of local government expenditure. The situation is at its most severe when local authorities ignore the Government's request for economy, actually increase their expenditure, and then finance it by supplementary rate. A Labour Government would not tolerate such a position. Indeed, in 1976 they did not hesitate to demand economies and to penalise local government to secure the cuts forced on them by the IMF. In Opposition, Labour Members are at their most irresponsible.
The overwhelming majority of authorities which levied supplementary rates to increase their spending were Labour-controlled—Labour authorities determined to increase public expenditure and, increasingly, Labour authorities using their position in local government to challenge the electoral mandate of the national Government.

Mr. Guy Barnett: What about the local mandate?

Mr. Heseltine: The hon. Gentleman is right to ask about the local mandate. The Shadow spokesman on the environment has made his position as clear as I make mine. Where there is a clash between the local and national mandate, the national mandate must prevail.

Mr. David Ennals: Will the right hon. Gentleman give way?

Mr. Heseltine: No.
In this context, the Government welcome the GLC's decision to reduce the level of its subsidy to London Transport to its former level in the current year. This reduction of its expenditure means that the amount of block grant payable in 1981–82 will be increased by £60 million over what it would have been under the GLC's previous budget. This grant is payable to the London boroughs, and I shall be taking steps to ensure that the necessary adjustment is made immediately in the supplementary RSG report to be published later this month. This will mean that the boroughs recover the grant in February and March of this year.
I understand that the London Boroughs Association is advising the individual boroughs to credit ratepayers who have paid the supplementary rates levied to meet the unlawful GLC precept, including the anticipated loss of grant, or to make repayments to them if a refund is requested. Of course, the precept in respect of ILEA stands. I welcome the advice to make credits or repayments. If, having considered its position, any

borough decides that it requires a sanction under section 161 of the Local Government Act 1972, I am prepared to give sympathetic consideration to granting such a sanction.
Part I of the Bill will ensure that there can be no repetition of the rash of supplementary rates witnessed in a minority of authorities in 1981–82. As from 1982–83 there will be a ban on all supplementary rates and precepts. Authorities will be required to make a single rate or precept for the whole financial year. Once they have set their rates for the year, councils will have to live within their means without further recourse to the ratepayer. Ill-judged increases in spending part way through the financial year of the sort seen this year will no longer be possible. The benefit for ratepayers, whether private individuals or businesses, is that they will know where they stand. They can plan their budgets without fear of disruption by further unexpected supplementary rate demands.
These provisions should cause few problems for the vast majority of responsible local authorities which manage their finances prudently. After all, until the recent experience under largely Labour-controlled authorities, the supplementary rate was a rare phenomenon. However, it is conceivable that an authority, through no fault of its own, may find that it faces an urgent need for extra revenue which could not have been anticipated at the time that it made its rate or precept for the year, perhaps to meet the costs of dealing with some natural disaster. In such circumstances, I would expect the authority to seek my approval for special temporary borrowing under the terns of schedule 13 to the Local Government Act 1972. The GLC will be covered by clause 3 of the Bill. I should, however, make it clear to the House that I would give my consent to applications for temporary borrowing only where it was absolutely essential for the expenditure to be incurred in the year to enable unavoidable commitments to be met.
The House will note that to underline the continued credit-worthiness of local authorities in the new situation, clause 3 also provides that interest on money borrowed by local authorities shall be a first charge on their revenues. That brings the position in England into line with that in Scotland, where authorities also have no power to levy supplementary rates. In addition, it is my intention that a condition of any borrowing I might approve should be repaid out of revenue income within the first quarter of the following year.
Part II of the Bill is necessary for much the same reason as part I—namely, the failure of some authorities to work within the Government's public expenditure guidelines. I have always been determined to recognise that the majority of local authorities co-operate with central Government in their expenditure plans. Indeed, nothing proves more clearly the reasonableness of the expenditure targets that we, as a Government, have sought than the number of authorities that have achieved, or come close to achieving, those targets. I am grateful to those local authorities that have tried so hard to meet my objectives. I am determined to protect those authorities that achieved their targets from the effects of a general reduction in grant. Section 59 of the Local Government, Planning and Land Act 1980 provides such a means—the multipliers that can be used to adjust block grant. I accordingly


propose to use that power to protect authorities achieving their individual targets or spending below their grant-related expenditure assessment figures.
The 1980 Act refers specifically to the main purposes for which the power to determine multipliers will be used. We therefore consider it right to take this opportunity to include in legislation a specific reference to that use of the power. Part II strictly circumscribes the ways in which the power to set protective multipliers can be used. It cannot be used to restrict the reasonable exercise of local government discretion. Local authorities will still be free to determine their own mix of services.
The specific provision that we propose to include in the Act can be used with one, and only one, object in view—setting a reasonable limit on the overall level of public expenditure. That has always been accepted as the proper concern of central Government. That part of the Bill ensures that we do not have to penalise authorities indiscriminately, as we had to do in 1980–81. As such, it will be welcomed by everyone who has the real interests of local government at heart.

Mr. John Page: I am grateful to my right hon. Friend for giving way. I was nervous that my silence might be construed as total acquiescence. I find the business of multipliers extremely complicated. Is my right hon. Friend absolutely sure that the base year that he has chosen is not too rough an instrument for certain local authorities which thought that they had tried to be good boys?

Mr. Heseltine: I take my hon. Friend's silence not as acquiescence but simply as politeness and an interest in what I have to say. I can help my hon. Friend on the matter of base years. He is referring to the initial standard on which I had to base the level of expenditure in 1978ndash;79, which was the year immediately preceding the general election. We have now moved away from strict reliance on that base line because there are anomalies associated with choosing any one year. The various targets that we have now set for local authorities place much greater reliance on their grant-related expenditure assessment position than could be done when we had only the base year on which to concentrate.
Part III of the Bill proposes the establishment of an Audit Commission to assume responsibility for the audit of local government in England and Wales. The House will know that when I became Secretary of State I inherited from the Labour Government the Advisory Committee on Local Government Audit. That body consisted of a wide representation from local government and the financial world, including the leader of the London borough of Camden. I am especially grateful to Mr. Brian Maynard, formerly a partner of Coopers and Lybrand, for chairing that committee and for the advice that it gave me.
That body considered the future of local authority audit and unanimously recommended the establishment of a Commission for England and Wales on a similar basis to that existing in Scotland since 1975. The Scottish Commission has, as far as I am aware, operated very successfully. Indeed, the Labour Party actually carried out the implementation of the 1973 legislation, which it did not oppose, and therefore set up the Scottish system.
Of course, local government will argue that we should leave the system alone to remain broadly unchanged. That

is not a wholly unfamiliar stance for local government to adopt. But in May I received a letter from the Association of Metropolitan Authorities from which I shall quote a small part. Referring to my proposals for an Audit Commission, it said:
Your own proposals do, to a large extent, meet the need for an independent and controlled approach to the development of the Audit Service, subject only to getting the composition of the Commission right and other matters such as whether or not LAMSAC should be embraced in the proposals.
There are three main points to be made about the proposed commission. The first is the general point about the need to secure the maximum value for money and the most effective pursuit of best practice that should unite all opinions in local government.
The other two issues are those of principle: first, who should appoint the auditors of local government and, secondly, the position of Parliament and the Comptroller and Auditor General in the context of the audit of local authorities. Of course, the right hon. Member for Manchester, Ardwick (Mr. Kaufman) drew some of the issues to the attention of the House in his point of order a few minutes ago.
Part III of the Bill sets up the commission and new responsibilities and strengthens the duties of auditors, especially in the crucial area of value for money. Audit involvement in value-for-money work is not new, but the Bill gives much greater emphasis to it. The commission will have a duty to undertake comparative studies on economy, efficiency and effectiveness, and the auditor will have a duty to satisfy himself that the authority has made proper arrangements for securing value for money. These separate duties are closely linked.
The central part of a value-for-money audit is comparing a local authority's practice and performance with best practice in other similar authorities. The commission's comparative studies, and studies undertaken by, for example, the Local Authorities' Management Services and Computer Committee and the Chartered Institute of Public Finance and Accountancy will provide the auditor with the basic tools he needs to do a value-for-money audit.
In the final analysis it is a local authority's responsibility to give its ratepayers value for money. Neither the auditor nor the commission can take over that responsibility. The auditor can draw an authority's attention to any shortcomings, but the policy decision rests with the local authority.

Mr. David Atkinson: In the studies by the commission on economy and efficiency, will my right hon. Friend encourage the commission to investigate the local government functions that are suitable for privatisation to provide even greater economy and efficiency, and to make recommendations?

Mr. Heseltine: The commission will want to consider those matters. However, it must consider the relative costs incurred in both the public and private sectors where those services are being carried out as alternatives within those sectors. Doubtless, it would wish to report on that matter. It is clear that the commission would not have the power to compel an authority to make a policy decision to move from public to private or private to public. That decision would be within the policy responsibility of the individual authority.
One of our objectives in drawing up the proposals has been to facilitate the greater use of private sector firms in


local authority audit work. The private sector has a wealth of experience to offer, especially on value for money. I believe that if the commission uses that expertise in harness with the particular skills of the district audit service, audit will have a much greater impact on local authority efficiency than it has at present.
We have also been concerned to strengthen the accountability of local authorities to their electorate. Part III does that in three ways. The increased audit effort means that local electors and ratepayers will be informed about their local authority. Auditors will have a new duty to report immediately on matters of public concern before the money is actually spent, giving the pubic an opportunity to influence events before it is too late. The Bill also widens the circumstances in which electors may object at audit. Electors will in future be able to draw the auditor's attention to matters which, though not illegal, appear to require his formal comment.
I mentioned the issue of principle on who should appoint the auditor to an organisation. It is the essence of the audit function that the auditor should be, and be seen to be, independent. The present system does not make a clear enough separation between the auditor, central Government and the authorities under audit. One of my key objectives has therefore been to "distance" local government audit from both central Government and local authorities.
District auditors are of course entirely independent in discharging their statutory duties, for which they answer to the courts and not to me, but they are civil servants carried on my Department's Vote; and their organisational link with central Government does not permit local government as a whole a role in its policy direction. Similarly, because local authorities appoint their own auditors, audit is not seen to be obviously independent of local government.
Part III therefore provides for the establishment of an Audit Commission for local authorities in England and Wales whose prime function will be to secure the audit of local authorities. The chairman and members of the commission will be appointed by my right hon. Friend the Secretary of State for Wales and myself. They will include a number of representatives of local government interests, and local government will be consulted about the membership. The commission—quite independently of central Government—will appoint the auditors after consultation with the local authorities concerned.
This proposal to take away from local authorities the right to choose their own auditors has understandably generated much opposition from local government, which claims that we are singling it out for especially hostile treatment. The facts do not support this allegation. Very few public sector bodies appoint their own auditors. The nationalised industries, the National Health Service and many other public bodies have their auditors appointed by the sponsoring Minister. Government Departments do not choose their auditors—they are audited by the Comptroller and Auditor General, who reports, of course, to Parliament.
In the private sector, company auditors are appointed by the shareholders, not by the directors. I know that for much of the time this is a distinction without a difference, but at critical times of difficulty shareholders do exercise their powers. The local government equivalent of shareholders would, I suppose, be the electors or ratepayers, but clearly it is impractical for them to appoint

auditors. That is why I propose to set up the commission—as an essentially independent body—to fulfil that function.
In short, I do not accept that local government is being singled out. On the contrary, I believe that our proposals will bring local government more closely into line with practice elsewhere in the economy.
The second issue of principle arises within the answer to questions about the role of Parliament and of the Comptroller and Auditor General and along the line of the point of order raised by the right hon. Member for Ardwick. The Government did not feel able to adopt the Public Accounts Committee's proposals for local government audit. We accept wholeheartedly the PAC's basic objectives: to improve the present audit arrangements, especially in the field of value for money, and to reduce the amount of central Government control over local authority audit. Both are central to the present proposals, but we could not accept the PAC's conclusion that the best way of achieving those objectives would be for the Comptroller and Auditor General to assume responsibility for the district audit service.
Local authorities are responsible to their own ratepayers and electors, whereas the Comptroller and Auditor General is responsible to Parliament. The rate support grant is paid to local authorities in such a way that they are free to make their own expenditure decisions. Parliament has a legitimate role to play in the determination of the size of the grant and in its broad distribution, but not in how the local authority spends its money. Once the grant is paid, how it is spent is the local authority's business. Ministers are already fully accountable to Parliament for their own responsibilities for local authority activities.

Mr. Michael Morris: My right hon. Friend is aware that members of the Public Accounts Committee could not possibly share his view that, as gross expenditure is 60 per cent. of local authority spending, it should be accountable to Parliament in the round. To that end, even within his own proposals, will he write into the Bill the requirement that the Audit Commission shall produce an annual report that will be laid before the House?

Mr. Heseltine: That would be a proper interpretation of the constitutional position that I have advanced. The House will insist on that, and it will be part of the Government's intention. I am grateful to my hon. Friend the Member for Northampton, South (Mr. Morris) for raising that aspect.

Mr. John McWilliam: On the basis of the logic of the argument expressed so far in favour of the Audit Commission, will the Secretary of State explain why the immediate reference from the auditor relating to any problems which might arise from the audit is to the courts rather than to the Audit Commission?

Mr. Heseltine: I do not follow the concern expressed by the hon. Member for Blaydon (Mr. McWilliam).

Mr. McWilliam: It is a surcharge.

Mr. Heseltine: The hon. Gentleman raises the question of surcharge. If the district or private sector auditor advises the local authority that it is acting ultra vires, the risk of surcharging exists. If I misunderstand the Gentleman, I will again give way.

Mr. McWilliam: The Secretary of State gives way again because, within the Bill as drafted, there is an opportunity for the auditor to refer to the courts items which are not ultra vires but are not within his view of what is efficient or practicable. It therefore seems that the Secretary of State is asking the courts to determine on subjective rather than objective terms what is ultra vires.

Mr. Heseltine: The hon. Member for Blaydon is not interpreting the legislation as it is drawn. As I understand it—although this point can be explored in Committee, if the Bill receives a Second Reading—the commission's powers are very much the powers of the district auditor and are merely being transferred under this legislation.
The district auditor refers to the courts when there is a matter of law at stake, and not the policy matters of individual authorities. As I understand it, there is no change in the legislation that we are proposing from the existing position. If the hon. Member for Blaydon is so selective, I am sure that he will want to pursue these matters in Committee.

Mr. George Cunningham: Who has the power to surcharge?

Mr. Heseltine: In the end it is the courts. The district auditor plays a role in the surcharging procedures, but the precise position about surcharges, which arises when a local authority acts outside the law, will not be significantly changed under the new as opposed to the existing proposals. There is a surcharge risk if local authorities act ultra vires today and there will be the same risk if they act ultra vires under the new proposals. It is not intended to change the local authorities' position in a significant measure or in principle under this legislation.

Mr. Cunningham: At the moment, if the district auditor thinks that the local authority has acted ultra vires, he can surcharge the council. Is it proposed that a private auditor would have that power in the future?

Mr. Heseltine: This is obviously an important legal matter. I do not want to give a final legal view about precisely where the responsibilities would lie without exploring the matter very carefully. I shall ask my right hon. Friend the Minister for Local Government and Environmental Services to return to that point in the reply. However, it is not intended that there should be a significant change in the surcharge position under the new arrangements and those under the existing arrangement, but the Government will explore the matter raised by the hon. Member for Islington, South and Finsbury (Mr. Cunningham) because it is an important point. I have dealt with that point as effectively as I can and the matter can be further explored in Committee.
I have sought to stress the extent of the commission's independence. A statutory body of this nature cannot, however, be completely independent. Parliament has an interest in seeing that it discharges its statutory functions satisfactorily. It is largely for this reason that the Secretary of State is given powers, in particular, to appoint the members of the commission, and to give the commission directions on the discharge of its functions. The Secretary of State will not—I emphasise the point—be able to give such directions in respect of individual local authorities.
The Bill also empowers the Secretary of State to fix audit fees and to require an extraordinary audit. These two are minimal reserve powers. The first of these would be

used only where the commission had, in the view of the Secretary of State, failed, for example, to reach agreement on a fee scale. The second preserves an existing power of the Secretary of State to direct an extraordinary audit when it appeared to him to be in the public interest that there should be one. However, it will generally be for the commission to decide whether to direct an extraordinary audit.
The commission will take over responsibility for the district audit service. Naturally the staff have questions about the nature of the change and its effect on careers and the loss of their Civil Service status. I believe that their worries are misplaced.
The audit function will be strengthened and the audit effort increased. Although I expect to see more widespread use of the private sector, the district audit service staff with their unique expertise will have a key role in the new arrangements and will, I believe, benefit from the enhanced importance of audit. The Bill contains safeguards to protect the interests of staff.
Part III of the Bill specifies the audits for which the commission is to be responsible. It includes all the local authorities in England and Wales, the passenger transport executives and the London Transport Executive. As large trading bodies, water authorities are more akin to nationalised industries than to local authorities.
We propose that they should switch to nationalised industry style audit arrangements with auditors appointed by the appropriate Secretary of State.
Audit reports on water authorities will be laid before Parliament and published, and we shall continue with our policy of using the Monopolies and Mergers Commission to examine their cost effectiveness and efficiency. Inevitably, the changes set out in part III will increase local government audit costs.
The commission will be required to be self-financing, apart from grants for working capital in the first two years. The audit fees paid by local authorities will be its main source of income, and an increase in fees seems inescapable, but I am convinced that any increase will be repaid many times over from the resulting improvements in local authority efficiency.

Mr. George Cunningham: The right hon. Gentleman has referred to the proposed changes in the auditing of water authorities. Did he notice in one of the newspapers over the weekend a reference to a fear that the public are losing a right of access to documentation from the water authorities? Will he say whether that fear is well grounded? My impression from the Bill is that it is not and that the public's right of access to documentation in the schedule to the Water Act 1973 is not affected. Is the change that is referred to in The Sunday Times story taking place?

Mr. Heseltine: I am grateful to the hon. Gentleman for raising that issue. The story is grounded in fact. There is a diminution in that right but there are alternatives which I believe are more important in the auditing of the water authorities. There will be a report and the authorities will be subject to the nationalised industries' disciplines with which we are familiar in another context. As I read the debate that took place on the Public Accounts Committee's report—I am sure that right hon. and hon. Members have read it—there was much more concern about the auditing of nationalised industries than about arrangements for auditing local government.
Any changes that might flow should stem from the Government's response to the PAC report. We see the water industry having a grouping with the nationalised industries as opposed to the local authorities.
The audit reports of water authorities will be laid before Parliament and published and we shall continue with our policy of using the Monopolies and Mergers Commission to examine their cost effectiveness and efficiency. In those two ways our material changes consist of new disciplines to replace one of those lost, which is the public's right of access to which the hon. Member for Islington, South and Finsbury has referred.
Our intention is that the commission should be established soon after Royal Assent. It will be given a skeleton staff and will begin detailed preparations with a view to acquiring its full responsibilities on 1 April 1983.
On that basis, I commend the Bill to the House. It is an important step in the Government's determination—

Mr. Tony Marlow: I am grateful to my right hon. Friend. Going back quite some distance in his speech, he said that there will now be only one rate increase each year, which might in some cases be a very big increase. Can he say what special protective measures he has for commerce and industry, who not only pay more than the domestic ratepayer but are completely disfranchised?

Mr. Heseltine: My hon. Friend will be as aware as I am—perhaps not quite as aware as I am, but none the less well aware—of the controversy that surrounded my earlier proposals, which would have given a degree of protection to the commercial and industrial ratepayer. In the absence of those proposals, it was not possible to give the degree of protection for the commercial and industrial ratepayer that would have been provided. That was one of the powerful arguments for my first proposals.

Mr. Harry Cowans: The right hon. Gentleman is taking away the right of local authorities to levy a supplementary rate and he is conferring upon himself, or any other Secretary of State, the right to alter local authorities' grants at any time during the financial year. In other words, he is conferring upon himself the right to make a decision on a supplementary rate while removing that right from local authorities.

Mr. Heseltine: The hon. Gentleman raises an important issue that has been raised by the Association of County Councils during its representations on the Bill. It is an issue that we shall want to consider as we examine the detailed workings of the proposed legislation. We come back in the end to the Government's determination to secure lower levels of public expenditure. We believe that the traditional relationship between local government and central Government entitles us to expect local government to keep within the levels of expenditure that are set by central Government. The failure of some local authorities to do that has led to the pressures that were enshrined in the 1980 legislation and which to some extent are extended by the Bill.

Mr. W. Benyon: Having jumped over part II of the Bill quickly, will my right hon. Friend say whether he agrees with a situation in which the rules could be altered after the beginning of the financial year? That is tantamount to fixing the rate.

Mr. Heseltine: I do not think that it is tantamount to fixing the rate. However, it would have an effect on expenditure levels in the absence of supplementary rates. The rates would have been fixed at the beginning of the year and would then not be capable of adjustment. I am sure that my hon. Friend understands as clearly as I do that that is the position. I realise that the issue has been the subject of representations that we are considering as a Government. I am sure that the House will want to consider it when it scrutinises part II.
The Bill is an important step in the Government's determination to get better value for money in the public sector and it includes important safeguards designed to protect those authorities that are co-operating with the Government's strategy. It will by the abolition of supplementary rates bring to an end the rapidly growing practice of sharp changes in the budgets of local government with all the hardship and uncertainty that this causes. And the Bill will bring a new impetus to the audit practices of local government while giving to local government for the first time a significant role in the policy direction of audit.
In all it is an important measure to carry us forward to the next stage which will follow the consultation we have now begun on the reform of local government finance itself.

Mr. Gerald Kaufman: The Secretary of State for the Environment has just spent 37 minutes seeking to persuade the House that there are merits in the legislation that he is asking us to approve tonight. Until the intervention of the hon. Member for Northampton, North (Mr. Marlow) in the final minutes of the Secretary of State's speech, anyone listening to him could have been forgiven for being completely unaware that part I of the Bill represents the Government's second thoughts, or, according to some reports, their seventh thoughts, on the subject. However, the fact is that we are debating the Bill in late January rather than November because the Secretary of State has been compelled to abandon his original intentions. Therefore, let the Government not seek to railroad the Bill through Parliament. If there has been any delay, it is entirely their responsibility.
It would be churlish to proceed without paying our last respects to the Local Government Finance Bill, which has been consigned to the oblivion that seems to await so many of the Secretary of State's projects. Last month, when he announced his change of course, the Secretary of State made it all seem so simple. He told the House on 16 December:
Instead of the proposals to permit supplementary rates only after a poll of local communities, the Government propose to ban supplementary rates altogether."—[Official Report, 16 December 1981; Vol. 15, c. 309.]
With a bound the Secretary of State was free. One would never have thought that the referendum was the linchpin of part I of his first Bill. When he made the original announcement in Torquay last September he laid stress on the role of what he called the mandatory referendum, by which the approval of the local electorate for a supplementary rate would have to be obtained.
In the following month, at the Conservative Party conference, the Minister for Local Government and


Environmental Services went to some trouble to proclaim the merits of the referendum as preventing what he called a
concentration of power in the hands of the State. That is precisely why we have proposed the referendum approach, so that the final decisions will not be for central Government but for the local people themselves.
Now, apparently, the local people are to be deprived of the right to make those final decisions that the Minister believed to be so essential four months ago. When the trouble over the referendum proposal blew up, the Minister for Local Government and Environmental Services was heard to mutter that all the bother could have been avoided if only, in place of "referendum", the Department of the Environment had used the phrase "town poll".
Therefore, the Government's climb down is much greater than the Secretary of State tried to make out, because it was not just the referendum that was the obnoxious feature of part I of the first Bill. In the original Bill the Secretary of State planned to interfere in the rate-making process of every local authority in the country by placing a limit on the level of each council's initial rate. That intention has now been abandoned, together with the referendum which would have been imposed on any authority seeking to go above the Secretary of State's limit for that council.
The ditching of part I of the original Bill is a great victory for local government and for the House of Commons, which forced the Secretary of State to change his mind. Why is local government so vehemently opposed to the Bill in its present revised form? Make no mistake about it: all three local authority associations still bitterly oppose what the Government are seeking to do.
The Association of Metropolitan Authorities, which is Labour controlled, has declared that the Bill represents a marked shift in power towards the Executive and away from elected local government. The Association of County Councils, which is Conservative controlled, denounces the Bill as
a further encroachment on local government autonomy… It will diminish the freedom of local authorities.
Even more vehement is the Association of District Councils, which is also Conservative controlled. That organisation warns that the Bill
seriously threatens the autonomy and financial independence of local government
and that its proposals
are a further move towards the centralisation of the spending decisions of each individual local authority and are inherently constitutional in nature.
It is for that reason that tonight we shall ask the House to agree that the Committee stage of this constitutional measure should be taken on the Floor of the House.

Dr. Oonagh McDonald: To illustrate the points that my right hon. Friend was making, may I make him aware of the position of my local authority of Thurrock? It is one of two local authorities outside the Greater London area that is having its total block grant removed. In spite of having cut spending to the bone, it will now be forced to lose 5p in the pound, thus forcing up rates and rents in the coming year. There will be elections in May. The power of the local authority will pass from the motley collection of Tories and Independents who now run it to Labour representatives.

That Labour authority will be forced to conform to the decisions of the Tories and Independents who are running the authority. It will have no power to change those decisions in the course of the coming financial year.

Mr. Kaufman: It is for the reason given by my hon. Friend in relation to her local authority and because of the appalling penalties being imposed on such authorities that the Association of District Councils is so strongly opposed to the legislation. It has summed up its opposition to the Bill in these stark words:
The whole institution of local government is under severe attack.
How is the Bill mounting that attack? It is a menacing fact that even clauses that seem purely technical in nature have the most worrying implications. For example, at first glance clause 3 looks innocent. The Secretary of State tried to gloss over it when he gave a misleading explanation of its purpose. Subsection (1) asks that the following should be inserted in the 1972 Act:
Subject to sub-paragraph 3 below, the interest for the time being payable in respect of money borrowed by a local authority, whether before or after the coming into force of this Schedule, shall be a first charge on the revenues of the authority.
That clause means that in the event of a local authority becoming insolvent, the money brokers must be paid before anyone else, even including the authority's employees. Therefore, that apparently innocuous clause at a stroke places local authority employees in a worse position than private sector employees whose firm goes bust. That is not a phantasmagorical mirage. It is significant that that clause did not appear in the Bill when it was originally introduced in November. It has been belatedly inserted at the insistence of the money lenders of the City of London. They discovered to their alarm that clause 12 of the old Bill—clause 4 of the new Bill—could force local authorities into insolvency. They were understandably worried at the implications for them. The dangers inherent in new clause 4 are at the heart of our opposition to the Bill. My hon. Friend the Member for Newcastle upon Tyne, Central (Mr. Cowans) and the hon. Member for Buckingham (Mr. Benyon) were right to draw attention to the grave implications of that clause, for reasons that I shall give later.
There are the proposals that make up the bulk of the Bill—the decision to set up the Audit Commission for Local Authorities. The House will relish the irony of the Secretary of State as self-appointed quango hunter-in-chief setting up one of the most powerful quangos that the country has ever seen. The Secretary of State has been busy recently in the world of quangos. Earlier this month he heartlessly killed off the National Voluntary Panel on Captive Hawks, but unfortunately he immediately cancelled out that decisive move by setting up in its place the Hawk Board: The new body used these words to explain the Secretary of State's equivocal policy on hawks:
The Department of the Environment has expressed a desire to continue a full discourse with the hawk keeping public on an ongoing basis.
We lose one body on hawks and gain another. We also gain a new and mighty quango which will oversee the spending of about £20 billion of public money.
Up to now, auditing of local authority expenditure has been independent of the Government, but if this proposal becomes law, in charge of local authority auditing will be a huge commission, up to 17 members strong, all no doubt adequately remunerated. There will be a deputy chairman,


who will be still more adequately remunerated, and a chairman, who will be yet more adequately remunerated. All of them will be placemen of the Secretary of State for the Environment. Most unfortunately, Sir John Grugeon, Conservative leader of Kent county council, will not be available, because he has just been put in charge of the Secretary of State's new fancy—a garden festival in Liverpool—at a salary of £21,000 a year. No doubt other public-spirited folk will be ready, in the national interest, to shoulder the necessary burdens.
The establishment of this new quango goes directly against the recommendation of the Layfield committee, which stated:
What is the most efficient and economical way of doing something is very often a question of judgment. Councillors are elected to local authorities to exercise such judgment and any procedures that are instituted to allow the government or any other body to investigate their decisions represent an intrusion into the responsibilities of the council.
The new commission is opposed by the Society of Local Authority Chief Executives and by the Society of Metropolitan Treasurers. The Association of District Councils declares itself "strongly opposed" to the proposed Audit Commission. The Association of Metropolitan Authorities warns that the new commission will bring about
interference by, and inevitably accountability to, the Executive".
The Association of County Councils rejects it as
yet another attempt to erode the autonomy of local authorities".
Moreover, this proposal is contrary to the expressed wishes of the majority of Back Bench Members. No fewer than 279 right hon. and hon. Members from all parts of the House have signed a motion approving the report of the Public Accounts Committee on the role of the Comptroller and Auditor General, and the report is opposed to an audit commission as proposed in the Bill.
The Secretary of State's remarks today were not an adequate response to that report. If he is saying that it is inappropriate for the Comptroller and Auditor General to be responsible for local government audit, because local authorities are elected bodies, he is demolishing his own comparison of those elected authorities with nationalised industries and thus demolishing the attempt to have their accounts audited in ways comparable with those of nationalised industries.

Mr. Heseltine: If the right hon. Gentleman is so much in favour of the PAC report on how local government audits should be carried out, why did the hon. Member for Edinburgh, Central (Mr. Cook), speaking from the Dispatch Box on behalf of the Opposition, say:
Nothing is more likely to cause resentment within local authorities than the suggestion that Parliament should ultimately be in charge of an efficiency and effectiveness audit of local authorities."—[Official Report, 30 November 1981; Vol. 14, c. 106.]
Does the right hon. Gentleman agree with that?

Mr. Kaufman: Yes. My hon. Friend was referring to the views of the local authority associations, which I have mentioned. They are certainly opposed to the PAC proposals on how local authority audits should be carried out. I was pointing out to the Secretary of State that 279 right hon. and hon. Members are in favour of that course of action. That being so, I further pointed out that the right hon. Gentleman's response to that report and his attempt to gloss over it by saying that local authority accounts ought not to be audited by a servant of Parliament because

they are elected bodies does riot chime in with the wish of local authorities not to be supervised by a quango appointed by him. That is my point.
I make that point particularly because one aspect of the proposals for an Audit Commission has aroused the most serious misgivings, even among those who support the plan for a commission. I refer to the powers of direction given to the Secretary of State in, for example, clauses 15 and 16 and schedule 1. Schedule 1 is particularly sweeping. It provides:
The Secretary of State may, after consultation with the Commission, give it directions as to the discharge of its functions and the Commission shall give effect to any such directions.''
It is no wonder that the provisions are opposed by the Institute of Chartered Accountants in England and Wales, by the Advisory Committee on Local Government Audit, which the Secretary of State quoted in his support, which says that such powers
would seriously diminish the independence and therefore the standing and authority of the commission",
and by the Association of County Councils, which warns that such powers
must reflect on the integrity of the commission and call into question its true independence from central Government".

All of those bodies are aware of the danger of putting such a weapon into the hands of any Secretary of State, but above all they are rightly fearful of giving such powers to the present Secretary of State with his unprecendented and discreditable record of interference in the freedom of local government.
Nowhere is the Secretary of State's baneful and distinctive touch more obvious than in clause 9, which is clearly based on section 99 of the Local Government (Scotland) Act 1973, which set up the Audit Commission for Scotland. Paragraphs (a) and (b) reproduce that section almost word for word, but a third paragraph has been added which does not appear in the Scottish Act. Clause 9 therefore further provides that
an auditor shall by examination of the accounts and otherwise satisfy himself…
(c) that the body whose accounts are being audited has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources and in the carrying out of its policies.
In recent years there have been serious misgivings about the increasing incidence of district auditors intervening in the policy making role of local authorities, setting themselves up as local Lord Dennings, but this is the first time that an Act of Parliament will actually instruct auditors to involve themselves in the political role of local authorities. This is an exceptionally dangerous clause, particularly when set in the context of the financial controls and penalties contained in parts I and II.
The provision in clauses 1 and 2 to remove the power of English and Welsh local authorities to levy supplementary rates and precepts has been accepted by some Conservative Members as preferable to the original proposal to impose a referendum on a local authority wishing to rate above the limit set by the Secretary of State, but it comes very strangely from a party which claims to represent tradition and continuity in British political and social life. Rating authorities have certainly had the power to levy a supplementary rate since the year 1601. The term "supplementary rate" itself dates from the Poor Rate Assessment and Collection Act 1869. This long-entrenched power is now to be swept away for short-term, adventitious reasons in what Aneurin Bevan would have described as "an emotional spasm".
At the time when the Secretary of State assumed his present office, very few local authorities levied a supplementary rate or precept. This year, as he has pointed out, about 30 have done so. That is still a small proportion of the total of 457 local authorities, and in all but two cases it was at least partly to compensate for removal of rate support grant by the Secretary of State.
What will be the result of this ban on supplementary rates? The local authority associations are in no doubt. The considered opinion of the Association of County Councils is as follows:
A prohibition on supplementary rates and precepts could result in local authorities seeking a high rate or precept initially to cover all contingencies.
However, there are some contingencies which even the most foresighted local authorities are unable to anticipate, such as the current spell of exceptionally severe weather. The financial problems for local authorities of the snow and its aftermath were referred to in both the evening news bulletins of ITN on Saturday 9 January. All worries on that score were swept away. On the authority of what I am assured was a senior source, this is what the newsreader on ITN told the nation:
The Department of the Environment, said the Government, were very concerned about the situation. Local authorities had the power to raise a supplementary rate to meet emergencies and other help might be available.
That power will be denied to local authorities as and when clauses 1 and 2 of the Bill become law. Those two clauses, combined with clause 4, place local authorities in the tightest squeeze that they will ever have had to cope with. Already local authorities have been mutilated on a financial bed of Procrustes devised by the Secretary of State and his colleagues. This has been accomplished by the imposition of arbitrary spending targets accompanied by damaging penalties achieved through the removal of grant from local authorities singled out as scapegoats.
All this goes against explicit assurances given by the Minister for Local Government and Environmental Services during the passage of the Local Government, Planning and Land (No. 2) Bill 1980. This is what he said on Report:
Some people have suggested imposing individual cash limits on every authority. That would be a very serious step indeed … When the public funds have been distributed, it is then a matter for individual local authorities and their councillors as to what their expenditure decisions are. It is their choice between services, their choice as to the volume of expenditure on those services, and their choice as to the rate levels that they decide to impose."—[Official Report, 8 July 1980; Vol. 988, c. 313.]
Every word of that solemn commitment has been violated by both the Secretary of State and the Minister. What is more, the targets have changed with such bewildering speed that local authorities simply do not know what to do to safeguard themselves. For example, 47 local authorities were, in relation to targets set by the Secretary of State for the current financial year, either underspenders or nil overspenders. On the basis of the same budgets which made them underspenders for this year, those authorities are transformed for the forthcoming year by the newly formulated targets, announced by the Secretary of State last month, from prudent and frugal budgeters into profligate wastrels, liable to the maximum penalties that the Secretary of State plans to impose.
Although the Secretary of State always accuses Labour councils of being profligate, more than half of these

councils are Conservative controlled. The problem is that if the Secretary of State does not catch a local authority with one of his targets he is sure to trap it with another. He is like the lady who bought her son-in-law two ties for Christmas. When he went for lunch with her on Boxing Day, he naturally wore one of the ties. But the moment he walked through her door his mother-in-law called out to him "What's wrong with the other tie?"
As far as I know, the Secretary of State does not yet have a son-in-law, but he does have the next best thing—the Minister for Housing and Construction. His local authority, Tonbridge and Malling, has been caught wearing the wrong tie. On this year's budget and target Tonbridge and Mailing is an obedient underspender. On that same budget, but on this year's new form of target, that same council becomes a maximum 7 per cent. overspender subject to condign penalties unless it makes lacerating cuts in its already not very satisfactory service.
As the Secretary of State produces each new spending target, accompanied by the inevitable new penalty, his imagination grows more and more bizarre and his use of language more and more eccentric. The House has the right to be informed how this year's targets are to be compiled and I shall therefore quote from annexe B of appendix C of what, for want of a better word, I will call the relevant document. It says:
The scaled minimum volume budget is reduced (or increased) by 0·2 percentage points for each 1 per cent. that the scale minimum budget is above (or below) 1982–83 GRE and a further 0·2 percentage points for each 1 per cent. that the minimum current expenditure at November 1980 prices has been termed skewing and it produces an unconstrained target for each authority.
This is only the beginning.
Because there is an imbalance between authorities spending above or below both volume targets or GREs, the total of unconstrained targets will not be equal to the aggregate controlled total. Consequently, the unconstrained targets are adjusted so that the sum of expenditure targets is equal to the cash control total (which is equal to the GRE control total). The 'skewed' targets thus derived are then compared to 1981–82 minimum volume budgets revalued by inflation factors which are based upon the Government's assumptions for inflation by economic category. The implied real reductions from these budgets are calculated as percentage differences. On the basis of these comparisons the targets for individual authorities are then adjusted on the following constraints:

(i) that no authority should be asked to make real reductions from revalued 1981–82 minimum volume budgets of more than 7 per cent.;
(ii) that no authority should have a target which implied a real increase in expenditure from its revalued 1981–82 budget; and
(iii) that authorities with planned spending at or below GRE and at or below volume target should not be asked to make real reductions of more than 1 per cent.


As a result of imposing these constraints the sum of individual targets is no longer equal to the cash control total.
The House would never have thought that they would be.
The final stage in the construction of the targets then involves the iterative process of scaling all the targets, and then checking the individual targets against the constraints outlined above until the targets sum to the control total without violating the constraints.
That sounds like rubbish, for the very good reason that it is rubbish, with its unconstrained targets, its iterative processes and its skewing. Some local authorities fear that they are being skewed for all they are worth. However, that rubbish will affect the daily lives and welfare of millions of people.
There are other oddities about the compilation of these targets. For example, local authorities are instructed for target purposes to assume an inflation rate of 9 per cent. Yet we all know that inflation is running at 12 per cent.


and that the most optimistic of the Government advisers would be surprised and delighted if the rate were to drop into single figures this year.
There are other inflation rates which the Government are operating. We can take the Bill as an example. When the first version was published on 6 November the cost of the Bill per page was 8·9p. The No. 2 Bill, published on 16 December, was much more expensive at 10·5p per page. The inflation rate for local government finance Bills has risen by 17·5 per cent. in six weeks—an annual rate of 160 per cent. Let us sincerely hope that there is no No. 3 Bill.
What is more, the Government's targets are highly unlikely to produce the expenditure cuts that are the object of the whole exercise, because this year local authorities have a choice of expenditure ceilings—a choice between their expenditure targets compiled in the manner that I have just attempted to describe and their grant-related expenditure assessments. If each local authority chooses to spend up to its GREA or spending target, whichever is the higher, local authorities will in the coming year spend £790 million—4·3 per cent.—more than the Secretary of State wants them to and they will be subject to no penalties whatever.
That is where clause 4 comes in. Its first objective is retrospectively to legalise unlawful acts that have been committed by the Secretary of State. The House will recall that last October the High Court found in favour of six local authorities in London which took legal action against the Secretary of State for unlawfully withholding grant from them. It is an offensive fact that four months later the Secretary of State has still not stated how he intends to comply with that court decision.
So now the Secretary of State's legal advisers—a pathetically hard-pressed and over-worked group of public servants—are scared that the grant penalties in last summer's grant hold-back exercise may be even more unlawful. Under the Local Government, Planning and Land Act 1980 the Secretary of State is barred from manipulating multipliers to reduce rate support grant, yet that is precisely the method that he has chosen to punish those councils that have over-budgeted on hold-back. Therefore, clause 4 aims to legalise retrospectively that whole disreputable episode.
Last month the Secretary of State and his acolytes rebuked the Labour Party for announcing how it intends to repeal the compulsory sale of council houses when it returns to office. They accused us of retrospective action—a curious description of advance notice of what a Government plan to do in two years' time—but clause 4 is retrospective in the shoddiest sense of the term. Last summer the Secretary of State ordered every local authority in the land to obey his instructions, and he told them the penalties if they disobeyed, yet he had no legal power whatever to impose those penalties. He still does not have that power, and he will not have it until the Bill becomes law. Only then will he be able to present the necessary rate support grant supplementary report to Parliament. That is why subsections (5) and (6) backdate to 1 April 1981.
Subsection (6) treads new ground, even by the Secretary of State's standards, and the House should pay careful attention to what it says. It states:
In relation to the year beginning on the said 1st April references in this section to guidance issued by the Secretary of State include references to guidance issued by him before the

passing of this Act and, as respects any determination under the said section 59 or paragraph 8, the requirements of subsection (5) of section 60 of the said Act of 1980 and of that subsection as applied by section 61(2) of that Act may be satisfied by consultation before the passing of this Act.
Not only will the Secretary of State be able to impose penalties that were not legal when he threatened them, but the Bill will even make the necessary consultation retrospective. Stalin himself could not have done better than that. This comes from a Secretary of State who has the nerve to lecture local authorities on the need to obey the law, when he flouts it and then asks Parliament retrospectively to legalise his unlawful actions.
The dangers of clause 4 go much further than that. At any time he likes the Secretary of State can single out a local authority for penal action. He can swoop on that authority and remove grants from it—the super hold-back that local authorities now fear.
As a result of the Bill the local council will not he able to levy a supplementary rate to make good that grant nor will it be able to borrow to make up the difference. Exactly like the danger that threatened Lothian last year, it could run out of money and be unable to pay its bills and wages. Under clause 3, those who have lent it money will have first call on whatever it is able to pay. As both the Association of District Councils and Association of County Councils solemnly warn, any council in the country is liable to be picked on by the Secretary of State for this cat-and-mouse game.
All that is bad enough, but there is now another factor that local councils must take into account—what NA we may call the Diplock factor. Last month, the House of Lords found against the GLC in the action on subsidisation of fares brought against it by Bromley borough council. Naturally, attention has mainly been focused on the impact of that decision on London Transport fares, and the Labour Opposition regard today's response to this problem by the Secretary of State for Transport as shortsighted and irresponsible. But the problems created by that judgment go far wider than London Transport. They affect every local authority in the country precisely because of the methods for controlling local authority spending adopted in the 1980 Act and in the Bill.
The dilemma that now presents itself to local government is contained in words spoken by Lord Wilberforce and echoed by two of the other Law Lords. Lord Wilberforce charged the GLC with what he called
a deliberate failure to deploy to the best advantage the full financial resources available to it by avoiding any action that would involve forfeiting grants from central funds. It was thus a breach of the fiduciary duty owed by the GLC to the ratepayers.
In his customary thoughtless way the Secretary of State greeted those words with a whoop of triumph and said that they placed increased pressure on local authorities, as he put it, to behave responsibly. It is true that every local authority is now wondering how best to fulfil its fiduciary duty. Should the council budget not to spend above its GREA threshold, as above that it forfeits grant? Will the council be fulfilling its fudiciary duty only if it budgets not to lose any grant through any Government penalty?
Councils spending above their GREA or target for 1982–83 could be taken to court by a ratepayer for being liable to grant penalties and so failing in their fiduciary duty. Incidentally, such councils could include Bromley borough council, which is an overspender on the new targets for the coming financial year. Have the councils


already under threat of hold-back of grant for having failed to adhere to this year's targets failed in their fiduciary duty as well—presumably, each one could be tested in court the moment the Secretary of State's penalties are retrospectively validated by the enactment of this Bill—or do the implications of the Lords decision go much farther than that?
As it is open to them to do by making massive cuts, ought councils to budget to ensure that their entire expenditure is covered by Government grant? Will they be failing in their fiduciary duty—

Mr. Cowans: I draw my right hon. Friend's attention to his opening remarks, when he proffered the advice given by the Department of the Environment to raise supplementary rates to deal with the effects of the bad weather. What would be the position if that were done by retrospective legislation? Would such a local authority find itself in court, or would the Secretary of State meet the bill?

Mr. Kaufman: Literally no one can answer that question because of the confusion into which local government finance has been thrown by the legislation and the decision of the courts.

Mr. Christopher Price: Will my right hon. Friend give way?

Mr. Kaufman: I have been speaking for some time, and if my hon. Friend will forgive me I will not give way at this point.
If local authorities do not have their entire expenditure covered by grant, will they be failing in their fiduciary duty? No one knows, and the uncertainty of the law could create a field day for litigants even more irresponsible and mischievous than Bromley borough council.
There could also be litigants the other way because local authorities have certain statutory duties which they are required to fulfil—highway maintenance, maintenance of a police force and fire service, refuse collection and disposal and provision of an adequate education service. The dilemma created by the Lords judgment for one authority, the Inner London Education Authority, is summed up in the following words:
It will be noted that a reduction of £115 million is still £15 million short of the point at which Government grant would be attracted. To put the matter in perspective, in order to obtain grants of £11 million, or relief to the ratepayers amounting to a product of a 1p rate, the authority would have to reduce its expenditure in 1982–83 by £145 million. Neither the target set by Government nor the facts set out in Annex B, which relate to that target, support the view that it would in practice be possible to achieve this, other than at the expense of the wholesale destruction of the service which it is the statutory responsibility of the authority to maintain.
That quotation is from a report just submitted to the ILEA by its chief education officer, Mr. Peter Newsam, a man in whose judgment the Government have just shown confidence by appointing him as chairman of the Commission for Racial Equality. If the ILEA fails in its statutory duty, as described by Mr. Newsam, it is open to any parent in its area to take it to court. If it spends the money necessary to fulfil its statutory duty, it may be failing in its fiduciary duty and be liable to legal action for that.
Those are the agonies of local government that previous legislation introduced by this Secretary of State has

created. The Government should be legislating now to remove those dilemmas and allow local government to conduct its activities free of such incalculable difficulties. But instead, the Bill, if it is enacted, will make those difficulties even worse.
The next Labour Government will repeal the Bill if it becomes law. In the interests of all local authorities and of the people whom they are elected to serve, it is undesirable for the Bill to become law. We shall vote against it in the Division Lobby tonight. If it obtains a Second Reading, we shall oppose its further stages with all our strength.

Mr. Tony Durant: The right hon. Member for Manchester, Ardwick (Mr. Kaufman) gave us an amusing dissertation about the form of the rate support grant. I wonder whether he has spoken to his right hon. Friend the Member for Stepney and Poplar (Mr. Shore) about the formula that his right hon. Friend used when he was the Secretary of State for the Environment. I have no doubt that it read as amusingly, but we do not see it because it is hidden in the archives of the Department of the Environment. However, above all, the right hon. Member for Ardwick has proved that there is a need to reform local government finance. It needs to be examined because it is becoming more and more complex.
In general terms, I welcome the Bill. I was opposed to the referendum formula in the previous Bill, but this Bill is a step in the right direction. We must look at local government budgets, particularly as they affect ratepayers, many of whom are widows, single-parent families, and so on, who are rightly concerned about the high level of rates. The local shopkeepers and small business men are also concerned.
The right hon. Member for Ardwick quoted many people and organisations in defence of his argument. I quote from the Association of British Chambers of Commerce, which sent us a paper today. The second paragraph of the paper is headed
Why Supplementary Rates must be banned
and states:
A supplementary rate demand is much more damaging than an equal addition to the main rate demand. It comes well into the financial year and cannot satisfactorily be taken into account in company budget and cash flow forecasts. A firm which allows for a supplementary in its costings will tender at higher prices than a rival which does not allow for a supplementary. If a firm does not allow for a supplementary rate, it will be faced with a choice between making a loss or emergency cuts in its costs.
Commerce certainly believes that a supplementary rate is damaging to its business, damaging to its budget and should not be allowed. I agree.
When there is a change in control in a local council the Bill will prevent sudden changes in policy and sudden implementation of a supplementary rate that is unexpected by the electorate. That will also help small business men.
Expenditure on local government is still too great a part of the gross national product—still well over 25 per cent. Ten per cent. of the working population is employed in local government, and £25·7 billion is spent on it. The Government should examine that in detail. We cannot sit idly by and accept those astronomical figures. We must take action, and with this Bill we are doing so.
We must encourage a move away from local government always providing the services that it currently provides. We should encourage privatisation. Where a


service can be provided more efficiently and at a lower cost by private industry, it should be given out to private firms. Why do we always look to local government to provide the solutions to our problems? The job of local government should be to provide services that no one else will provide. Refuse collection is an outstanding example of where private industry can operate. Southend has carried out the experiment with great success, and an efficient, well-run refuse service is provided.
Do we really need direct works departments when so many small builders need work? Direct works departments have a damaging effect on local industry and local builders. Should local government be concerned with the leisure industry? After all, Lew Grade made a mistake, so local government can also make mistakes. Surely we can leave it to the private sector to risk its money.
In the long term, rate reform is the main aim and we must move quickly towards it. The Green Paper outlines the options. I accept that none is perfect. I do not believe that there is a perfect answer to local government finance. If there were a perfect answer, we would have found it years ago. No one likes taxes and we must therefore find the best option.
I welcome the audit option. I do not understand the fears about it. Audit is a perfectly normal process, so why should it not be encouraged and put out to the private sector? There should be better reporting from auditors. One of the weaknesses in audit in commercial concerns is that the auditors have limited powers. Their powers should be extended there and in local government.
I am worried about the water authorities and about the removal of citizens' rights to scrutinise the accounts. I have been approached by my Reading ratepayers regarding the Thames water authority. I accept that they did not find anything particularly wrong, hut their examination of its accounts had a salutary effect on the water authority. It made it look more carefully at what it was doing. We should not dismiss lightly the right of local residents to examine accounts. I should like that right to be reintroduced into the Bill.
I agree with the right hon. Member for Ardwick about part II of the Bill, and we must examine it carefully in Committee. It has been included as a safeguard against local authorities that impose too high a rate demand. However, we must be careful that in including this safeguard we are not setting the rate levels for everyone in the country.
I regard the Bill as an interim measure and I hope that the Government classify it as such. We need rating reform as quickly as possible. I spent the weekend looking up old speeches and I came across my maiden speech. It is always revealing to an hon. Member to read his maiden speech, because it makes him realise that perhaps he was not as good as he thought he was. However, I stressed in my maiden speech the need for urgent rate reform. Things were bad enough at that time and they have got worse.
We also need to consider the position of commercial ratepayers. They have been left out of the general permutation and that will have to be considered in Committee. The Bill is worthwhile. We shall have to work on it in Committee, but I support its general tenor.

Mr. David Ennals: The hon. Member for Reading, North (Mr. Durant) will not expect

me to agree with most of his comments, but I share his hope that the Bill is an interim measure, and I hope that we shall be told later how long it is to be with us.
I congratulate my right hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman) on a speech that made mincemeat of the Bill. Of all the members of the Cabinet the Secretary of State for the Environment is the most difficult to understand. He shows extraordinary arrogance in his relationship not only with individual local authorities, but with the organisations that represent those authorities, whether Conservative or Labour controlled. The right hon. Gentleman was influenced by the threats of his Back Benchers that they would not vote for the original Bill, which contained the referendum provisions, but he is not influenced by local authority associations.
The Secretary of State refused, in his usual polite way, to give way to me after referring to the consultative council. I served on that council for longer than the right hon. Gentleman and I know that the previous Labour Government wanted from time to time to see reductions in public expenditure. We discussed that with the local authority associations, but at no time did we have disagreements and, whatever party controlled the associations, we never brought forward the sort of throat that is contained in the Bill.
The Secretary of State constantly says one thing and does another. It is fascinating to read in the Green Paper on alternatives to domestic rates:
successive Governments have wanted local authorities to have a wide measure of independence and local autonomy over their budgets and priorities and to be accountable to their own electorate for their decisions on these matters rather than to central government.
Making such a statement and introducing the Bill before us is blatantly two-faced.
The Secretary of State's current proposals are almost as dangerous as were the referendum proposals. Local authorities may be put in a desperate situation if the Government estimate of the inflation rate goes wrong—and it has gone wrong each year so far and is seriously wrong at present. Local authorities will be required to cut essential expenditure, to go bankrupt or to act contrary to the law.
Local authorities may decide that in order to face up to such eventualities, which may include another winter like the present one, which involved considerable unexpected expenditure, they should set a rate level higher than they may need—to the disadvantage of their ratepayers and contrary to the Government's policies.
The Secretary of State acts in an extraordinary double manner. He commands local authorities to slash their expenditure, but, even if the Norwich council merely stood still on public expenditure in 1982–83, the cuts in the level of the rate support grant would mean approximately a 15 per cent. increase in the rates—not on the decision of the authority, but on the decision of the Secretary of State.
Norfolk county council faces problems as a "wicked overspender" and is discussing the scrapping of all nursery places. Forcing local authorities, whether Conservative or Labour, to act against the interests of their citizens is contrary to the principle of local democracy as we have known it over the years.
My right hon. Friend the Member for Ardwick quoted the views of the ADC, which is not Labour controlled. The Labour council at Norwich supports those views. The association


believes strongly that a vigorous democratic and independent local government is an indispensable part of our national system of government.
Does any hon. Member not believe that local government is a vital part of democracy in Britain? Local authorities say that the Bill will cripple them. The ADC recalls the reorganisation of local government 10 years ago when the then Conservative Government declared
that local government was an essential part of the whole democratic framework of government and that, above all else, a genuine local democracy implies that decisions should be taken—and should be seen to be taken—as locally as possible … Ten years on the whole institution of local government is under severe attack. The Local Government, Planning and Land Act 1980 brought in a package of financial and other measures which Secretary of State… claimed 'offers a new deal for local government. It is a major advance in local freedom and local responsibility'. Yet the block grant and capital expenditure controls decisively shifted responsibility and accountability from local government to central government in key areas of finance.
The Government knew exactly what they were doing, and they are taking the process a stage further in the Bill. That is wrong in principle and it must be opposed.
One matter on which I disagree with my right hon. Friend the Member for Ardwick is the possibility of a No. 3 Bill. I hope that the Government will bring in a Bill to remove the most objectionable parts of this Bill. The Secretary of State uses Bills as White Papers and the cost of paper reminds us that local government's record in controlling its expenditure is far better than the Government's record in controlling theirs.
The Secretary of State chides local government as though his hands were clean and local authorities were naughty boys. By what right does he do that? Councillors have been elected to do their jobs. The Secretary of State was not elected by the public to be Secretary of State, but councillors were elected by local citizens, on the basis of manifestos and commitments. Did the Secretary of State write into the Conservative manifesto in 1979 that it was the policy of the Conservative Government, step by step, Bill by Bill, to reduce the powers of local government and undermine local democracy? Of course not. In fact, most of the steps that the Government are taking would have been denied and were denied by them at the time of the election.
I shall leave the matter there, because I know that many of my right hon. and hon. Friends wish to speak. People throughout the country, across party lines, not just in this House but in local councils, both Conservative controlled and Labour controlled, whether before May or after May, will say "This is not a Bill that the House of Commons should pass". Very few local authorities have found it necessary to have a supplementary rate, and no good reason has been given for introducing the Bill. I and my right hon. and hon. Friends will vote with deep conviction against what I consider to be a deplorable Bill. It is a blatant attack on local government powers. It is a display of no confidence in the principles of democracy at a local level. For those reasons I believe that we should reject the Bill.

Mr. Charles Morrison: Once again, I am almost speechless at the display of righteous indignation from the Labour Benches about alleged intervention and increased control by this Government in the affairs of local

government. I am speechless when I recall the record of the last Government, who consistently and—unfortunately—effectively, reduced the autonomy and power of local government during their period of office. I can at least claim that I am guilty of the dangerous charge of consistency about the need to uphold local government autonomy, whether I was speaking on the Opposition or the Government Back Benches.
I welcome the decision to drop the proposal for local government referendums. The right hon. Member for Manchester, Ardwick (Mr. Kaufman) said that it was a victory for the House of Commons. It is none the worse for that. The referendums would have undermined the concept of representative local government. In my view, they would have been a constitutional monstrosity. Moreover, they would not necessarily have had the merit of achieving their stated objective of controlling local authority expenditure.
I agree with my hon. Friend the Member for Reading, North (Mr. Durant) that we have a duty to consider the future of local government finance, and to consider rating reform. The Green Paper is a step in that direction. He was right, too, when he said that there is no perfect answer. However, there must be a better answer than the present system of local government finance.
For the time being I am not unhappy about the proposal to abolish the supplementary rate. Of course, the proposal is open to the criticism that, in consequence of it, some local authorities may increase their main rating demand. However, on the whole, I think that that is unlikely, because supplementary rate demands, in spite of what my right hon. Friend the Secretary of State said, are relatively rare. I can recall no occasion in my part of the country—I was in local government in 1957, but also before and after that time—when a supplementary rate was demanded.
On the other hand, the abolition of the supplementary rate has two specific advantages. First, it prevents a newly elected controlling party from lashing out a supplementary rate demand immediately on election, as happened in the case of the Greater London Council. Secondly, it removes uncertainty from domestic, commercial and industrial ratepayers alike. My hon. Friend the Member for Reading, North rightly mentioned the views of the Association of British Chambers of Commerce. What is true of commerce is true of the budgeting of the domestic ratepayer. I therefore welcome part I of the Bill, and I am happy to support it.
I must admit, however, that there my happiness ends. I do not believe that benefits will be achieved from parts II and III. The Bill would be better without them, because they attack the autonomy and constitutional position of local government. Yet again, I remind my right hon. Friend that until now a major facet of Conservative philosophy has been the decentralisation of power. However, the Department of the Environment seems more concerned with centralising it. In doing so, as my right hon. Friends take on more power, leaving local government with less, they produce more rods for their own backs and more and more reasons why they will be blamed for all the alleged misdemeanours of local government.
Yet again, I must remind my right hon. Friends that it is a bad principle to legislate year after year on the same subject. It says little for the depth of the initial thinking and—at least as bad—it is a recipe for chaos and uncertainty. Only last year we had the Local Government,


Planning and Land (No. 2) Act. Some of us did not like it, and we said so. However, once passed, it should have been given time to settle down and be tested over several years. That did not happen. Here we go again, and I fear that it will be for the worse.
It is significant that both the Conservative-controlled Association of County Councils and the Association of District Councils are deeply concerned about the provisions of parts II and III. Surely the Government should have more regard for the opinions of its more responsible friends. I regard clause 4, in particular, as thoroughly obnoxious. To paraphrase the views of the Chartered Institute of Public Finance and Accountancy, the clause allows the Secretary of State freedom to decrease a particular authority's grant at any time during or after the end of the financial year in accordance with any guidance on local authority expenditure levels that he may choose to issue, and by any amount that he chooses to specify in a supplementary report. It is too far-reaching. As it stands, the clause is unacceptable to me. I do not know how any local authority can budget with confidence against the background of clause 4. When clause 4 is coupled with the provision to abolish the supplementary rate, it means, as my hon. Friend the Member for Buckingham (Mr. Benyon) said, that any Secretary of State, not necessarily my right hon. Friend, at any time in the future can have total control over the spending of every local authority. In those circumstances, why bother to have local government? Clause 4 is simply not good enough, and should be removed or vastly amended.
I cannot see how part III and the establishment of an Audit Commission will achieve much. I cannot see that it will do much more than is done at present by the district auditor. On the other hand it could become an expensive quango. I note with interest that my hon. Friend the Member for Carlton (Mr. Holland), the best known quango hunter, is present to hear the debate. I hope that my hon. Friend, if he catches your eye, Mr. Deputy Speaker, will intervene to give his own comments on this proposal.
The present auditing arrangements by the district auditor have worked pretty well. I fear that the new proposals will prove bureaucratic, expensive and prove to no advantage. My right hon. Friend said—I think I am quoting him correctly—that the district audit system does not allow central Government a role. That is a very good thing.

Mr. Heseltine: No. A role in the policy formation of local government audit.

Mr. Morrison: I am sorry. I misheard my right hon. Friend. I withdraw my criticism.
My right hon. Friend also drew the analogy between the appointment by shareholders of auditors, implying that shareholders are outsiders, and the provision in the Bill for the appointment by him of the Audit Commission. I suggest that his analogy is false. It seems to me that shareholders are much more analogous to electors who have elected councillors as their representatives.
The appointment of auditors for nationalised industries may be made, rightly, by a Secretary of State. In that instance, however, the Secretary of State is acting, in effect, as the shareholder's representative. I do not therefore believe that my right hon. Friend's analogy is correct. He is not, in this instance, the representative of

the shareholders in local government. The representatives of the shareholders or electors are the elected councillors. I need to be a great deal more convinced about the proposed Audit Commission.
I shall support the Government tonight on Second Reading. There must, however, be some major amendments to the Bill, particularly in regard to clause 4, when the Bill goes into Committee.

Mr. Guy Barnett: I agree with a great deal of what the hon. Member for Devizes (Mr. Morrison) said, although I was surprised to hear his suggestion that the previous Government, of which I was a junior member, did more damage to the independence of local government than the present Government. As someone who was an Under-Secretary responsible for local government, I find that remark surprising. I do not recognise it in my behaviour. I was interested that the hon. Gentleman did not elaborate on the charge.
Since the Secretary of State for the Environment moved to Marsham Street, there has been growing alarm about the damage that he would cause to local government. During its passage the Local Government, Planning and Land (No. 2) Bill found hardly any friends in the House or outside. At that time, the local authority associations, all of them dominated by the Government's political friends, were also against it. They were strong in their opposition to it.
The spectacle has had to be endured of a Government who blandly say one thing and do precisely the opposite. Every step along the road that the Government have taken has been in flat contradiction to what the country had been led to believe was the philosophy of the Conservative Party—that local matters, so far as possible, should be under local control, that civil servants are not and cannot be competent to judge how resources should be allocated because they lack the tools to enable them to make such decisions and, even if they did possess them, that local decisions are better and more properly the responsibility of local democracy.
The Prime Minister, as Secretary of State for Education and Science, when introducing the White Paper on nursery education, said:
We do not want to attempt central detailed control over the way resources are used because the statistical methods at our disposal for measuring social deprivation are crude".—[Official Report, 19 February 1973; Vol. 851, c. 44.]
You can say that again. Not merely did the Prime Minister then recognise that local councils are competent to make local decisions. It is also apparently even recognised by the Government in the statements that they make. That is the stated purpose of the Bill hon. Members are not considering. The Queen's Speech, foreshadowing this legislation, described the purpose of the Bill as to
improve the accountability of local authorities for the level of their rates".
It could have fooled me. I assume that the word "accountability" implies accountability to a local authority's electorate. If so, this Bill is in flat contradiction to the stated intentions of the Gracious Speech. Perhaps the speech did not mean that. Perhaps it meant accountability to the Secretary of State and his civil servants. That is, in effect, what the Bill does. There can be no equivocation.
The Bill places councils firmly under the control of the Secretary of State and makes them accountable to him for what they do. I wonder sometimes whether the Secretary


of State understands the meaning of the words he utters, or whether the only interpretation to be put on his behaviour is to assume that he will always do the exact opposite of what he says he will do. I refer to the statement that he made to the annual conference of SOLACE in July 1979. His words were:
I believe that an effectively functioning local democracy can monitor the activities of local councils far better than civil servants in Marsham Street".

That is an interesting reflection on the Bill that hon. Members are now considering. Whatever the right hon. Gentleman's denials and protestations of innocence, whatever sophistries, including some very brilliant ones, from his Minister for Local Government and Environmental Services, this Bill will enable him to monitor and control the activities of local authorities and will finally destroy local government accountability. I can illustrate this no better than by referring to the horrific consequences of the powers that I believe the Secretary of State is taking and asking the House to approve than by quoting the effects that will be felt in my borough of Greenwich.
I take, first, the grant-related assessment per head of the population for the current year. It amounts to £158. For the London borough of Camden, it is £311. So, from their intimate knowledge of local affairs, Department of the Environment civil servants have worked out that it is almost twice as expensive to provide a comparable level of service in Camden than in Greenwich. They are convinced clearly that this is a reliable estimate since for 1982–83, I am informed, the grant-related assessment for Greenwich is £175 per head while the Camden figure has risen to £352, again twice as much.
The grant-related assessment for Greenwich is £36 million. There might be some demonstrable scientific basis for this assessment, although no one to whom I have spoken can understand what it is. What has been clearly and brilliantly illustrated by my right hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman) as much more spurious is the so-called target figure. I understand that next year, in Greenwich, this will be just over £48 million. How is that worked out? I do not know. I am even more confused having listened to the account given by my right hon. Friend than I was before. I understand that it is based on what the Government thought Greenwich ought to be spending in 1979–80 plus what the Government think is a reasonable inflation figure, but minus such cuts as the Government reckon should be made. It could not be a more arbitrary figure.
The Government label Greenwich as an overspender because in 1981–82 the council is spending just over £50 million. Inevitably, to achieve the same level of service, this implies an inflation figure of about £5 million. Because the council is an overspender, the Government are asking for cuts of £7 million which, without the safety net, would work out at 13 per cent. in one year. The fact that a safety net is needed seems to indicate the failure of the formula that the Government are attempting to use.
Now the Secretary of State comes forward with this Bill which gives him a new power making it impossible for the council to make any sensible estimates for next year. At least under the 1980 Act, it knew where it was when it was making decisions and which decisions were likely to bring

it into the penalty area. But the Bill gives the Secretary of State power to penalise an authority in June, July or at any other time he pleases, by almost any amount he pleases.
No longer will it be possible for an authority to make its budget and fix its rate with any reasonable measure of certainty about the likely consequences. No longer will the supplementary rate be available to it to meet these new uncertainties. It can give no guarantee to its electorate when fixing its rate that it has any reliable idea of the outcome—whether the outcome is a drastic cut in expenditure during the year, whether it will have to draw on balances, or whether, with the permission of the Secretary of State, it will have to borrow.
Therefore, I am left with a question. In the circumstances, how can my local authority act responsibly? It is accused of being an overspender, but figures available to the Government, which observe one code of practice of local authority annual reports, belie this claim. On the cost of providing services per thousand of the population, Greenwich is below the inner London average. For personal social services, it is well below average. The joint manpower watch survey of September 1979 shows that, although Greenwich is above average in the size of its population, its staff numbers are generally below average. If staff is related to population, Greenwich is virtually the lowest for all or most of its services of the inner London boroughs.
By these indications, required to be published by law in order for such comparisons to be made, Greenwich comes out as a highly efficient authority and also a very prudent authority. Yet the Government label it a high spender. To me, that makes no sense.
The Bill will enable the Secretary of State who, in my opinion, is working on false assumptions and misleading figures, to impose unknown penalties on local authorities. The situation will be similar for all local authorities. According to an article in the Financial Times today, it will result in the Government
controlling rather than influencing council spending.
It will make local councils into the poodles of the Secretary of State and place them on a level similar to health authorities in their relationship to the Secretary of State for Social Services.
I have never felt more inclined or more certain about a decision to vote against a piece of legislation, and I take that view because the Bill will gravely damage my local authority and local government.

Mr. Philip Holland: I congratulate my right hon. Friend the Secretary of State on the measures that he proposes in part I and, unlike my hon. Friend the Member for Devizes (Mr. Morrison), in part II of the Bill to discourage the worst excesses of profligate local authorities. I commend particularly the flexibility of his approach in producing a solution to the difficult problem that is acceptable to those of us who did not like his first proposal.
I support the main objective of the Bill and the method of achieving it which is set out in parts I and II. I have no doubt that the measure will be adequately supported on Second Reading and that its passage in this, or an amended form, will be assured through its remaining stages.
I am reminded of an anecdote told by one of the characters in a classic Western film called "The Magnificent Seven" about a man falling from the top of


a skyscraper. He was heard, as he passed windows on the way down, saying to himself "So far, so good." I, too say "So far, so good." But I come specifically to the proposal in part III and schedule 1 to establish an Audit Commission and the framework within which it will operate.
It may not be within the knowledge of the House, though it is within the understanding of the Government, that I have a strong objection to any unnecessary expansion of ministerial patronage arising from the creation of non-departmental public bodies. In this context, I am delighted to welcome the conversion of the right hon. Member for Manchester, Ardwick (Mr. Kaufman) which has taken place since he moved from Government to Opposition, but, far more than that, I welcome steps already taken since 1979 by Ministers in this Government to reduce the number of such bodies.
In general terms, I dislike quangos because in their present numbers they constitute an unnecessarily large expansion of bureaucracy under the patronage of Ministers while, to a great extent, lacking accountability to Parliament for their activities and their finances. In other words, they are creatures of the executive enjoying quite extraordinary facilities for empire building. In this context, I refer particularly, though not exclusively, to the executive agency-type quasi-autonomous national governmental organisations.
My objection to the Audit Commission proposed in part III is that it includes almost all the worst features of a traditional agency-type quango. I remind the House that clause 5 provides that, after consulting whoever it pleases him to consult, the Secretary of State shall appoint the chairman, deputy chairman and the members of the commission at his discretion.
Schedule 1(3) gives the Secretary of State power to direct the commission on how its functions shall be discharged. Schedule 1(4) gives the Secretary of State power to remove from office any member not discharging his function in a manner satisfactory to the Secretary of State. Schedule 1(5) empowers the Secretary of State to determine the pay, allowances and pension provisions for each member. Therefore, with the power to hire, fire, pay and give directions to "quangurus", the Minister clearly retains to himself absolute power over the policy decisions of the commission. He can appoint those who will do his bidding and get rid of those who will not.

Mr. McWilliam: Is not the hon. Gentleman criticising the powers of the Secretary of State rather than those of the proposed body?

Mr. Holland: I shall come to the powers of the proposed body, if the hon. Gentleman will allow me to continue.
The commission comes into its own when it deals with day-to-day administrative tasks, such as engaging staff and fixing its revenue. Apart from the chief officer, whose appointment requires the approval of the Secretary of State, the commission is empowered to engage as many employees as it wishes, to offer them whatever it chooses in terms of pay, allowances, expenses and compensation for loss of office, and to exercise its monopoly power by charging its customers whatever fees it deems necessary to meet its own expenditure. Clearly this represents an open invitation to empire building. The only hazard for this highly qualified accounting body to overcome is the need to produce an annual report that will allay any possible anxieties of the Comptroller and Auditor General.

We shall have the kind of quango that I find almost wholly objectionable, not least because it is unnecessary in this form. Whether it is necessary to have the independent appointment of auditors for local authorities is a matter about which the Secretary of State is in a better position than I to judge. Indeed, I accepted his arguments on this point, but, even accepting them, alternative methods of achieving his objective come immediately to mind.
First, if it is desirable for auditors to be appointed under the direction of the Secretary of State—which is virtually how this could work out—why does he not directly do the job himself? In that way there would be more direct public control over the size of staff and the charges levied, the Secretary of State would be directly answerable to the House for every detail of his activities, and the threatened creation of yet more "quanguru" jobs for the boys would be eliminated.
If, on the other hand, it is felt desirable to take the appointment of auditors out of the hands of both local authorities and the Minister—the Secretary of State implied this, anyway—perhaps we should move from the commoner British type of quasi-autonomous national governmental organisation towards the American-style quasi-autonomous non-governmental organisation. This is the type of quango established privately to take advantage of a Government contract or to perform functions that would otherwise need to be performed by the Government. This type is rare, but not unknown, in Britain. Examples are the Press Council, set up by newspaper proprietors, the Jockey Club, set up by the principal racehorse owners, and—for a totally different purpose—Trinity House, which was established and paid for by the ship owners.
By the same token an audit board—or whatever it is to be called—could be established by the professional accountancy and audit institutions. For example, appointments to the board could be divided equally between the three professional bodies listed in clause 7 (6), which cover practitioners in England and Wales, since the measure will apply only to England and Wales. The board could still be required to submit an annual report to the House, to the Comptroller and Auditor General, or to both. That could be required by statute. If it was felt desirable, there might be representation of local authority interests either on the organisations appointing the board or on the board itself. On balance, it would probably be preferable to confine membership of both bodies to professionals sharing the common interest of maintaining the highest professional standards in the auditing of public accounts.
During the past two and a half years the Secretary of State has announced the abolition of 64 non-departmental public bodies associated with his Department. I take a kinder view than the right hon. Member for Ardwick of his activities in that respect. He has announced the creation of only five new bodies in that period. Therefore, he has cause to feel aggrieved with me, because, having offered only general protests at the creation of 67 new quangos by his right hon. Friends in other Departments, I now make a more specific protest at his fifth proposal for a new public body. I can only say to him and to my right hon. Friend the Minister, who is holding a watching brief, that it becomes necessary, at some stage, to make a start and to shout "Enough is enough".
It is not merely the number of the Secretary of State's new creations to which I object, but the nature of the fifth creation that I do not like, because it has weaknesses that


are avoidable. Because I approve of the rest of the Bill, I shall not vote against Second Reading. However, I find myself unable to support a measure containing the proposal set out in part III and schedule 1, unless the Minister can give a firm commitment to amend the Bill in Committee to meet my anxieties about the present proposal. In default of a clear and specific undertaking tonight, I propose to abstain on the Question, That the Bill be now read a Second Time.

Mr. John Cartwright: The hon. Member for Carlton (Mr. Holland) will, I hope, forgive me if I do not take up all his quango-hunting, which he expounded in detail and with such ominous—for the Government Front Bench—determination.
The Secretary of State is an unlikely adherent to the policies of the late and unrevered Leon Trotsky, but, in local government, the Secretary of State has embraced the Trotskyite theory of continuous revolution. No one could accuse the right hon. Gentleman of being idle during his time at Marsham Street. During the three years in which he has held office, he will have changed the grant system on four occasions, brought in major legislation that has lasted only one year, twice introduced Bills that had to be withdrawn and produced a grant system that is so tortuous and mind-boggling in its complexity that it is incomprehensible to councillors, local government officers and, by the looks on their faces, to Ministers as well.
It is a measure of the Secretary of State's achievement that local government is nostalgic about the old rate support grant system. That system was complicated, but by comparison with what we now have it was the very model of stability, simplicity and comprehensibility. The Bill is the most recent of a series of assaults that the Secretary of State has unleashed on local government and left it reeling and punch-drunk.
Part I is breathtaking in its simplicity. The Secretary of State has clearly given up the struggle to control supplementary rate demands and has come up with the simple solution of outlawing them altogether. In the minds of most of those who understand local government there is no doubt that that will tempt local authorities to levy a higher rate than necessary in order to safeguard themselves against the unexpected happening during the year.
Local authorities that are unwise enough to believe in Government forecasts about pay and price rises will find that they need more in the kitty than they began the year with. If they find themselves in difficulty they will, under the Bill, have to go cap in hand to the Secretary of State for borrowing approval. The Secretary of State has given fair warning that slight misjudgments on the part of the Government about inflation forecasting and so on will not be allowed as an excuse when it comes to borrowing permission. I know municipal treasurers, and they are prudent individuals. I am sure that they will recommend their councils to budget for substantial reserves when they levy their rates at the start of the next financial year. Some of them will certainly need substantial reserves to deal with the problems stored up for them in part II.
As has been pointed out, clause 4 gives the Secretary of State power to cut Government grant paid to individual local councils which, in his view, fail to comply with his guidance on what the Bill calls
any reduction in the level of local authority expenditure … which he thinks necessary having regard to general economic conditions".
That is a sweeping power to penalise councils that do not comply with the Secretary of State's judgment. As has been said, the power can be exercised at any time during the financial year.
The Secretary of State seems to be employing a double-barrelled shotgun against what he regards as recalcitrant councils. The first barrel cuts the grant and the second denies supplementary rates to get local authorities out of the difficulty of a reduced grant. It also makes local authority borrowing illegal unless it has the Secretary of State's agreement. This double-barrelled attack gives the Secretary of State a powerful weapon with which to bludgeon local authorities into making expenditure cuts.
The Chartered Institute of Public Finance and Accountancy has made some interesting comments on the impact of enforced cuts part way through the year. CIPFA reckons that it would be at least June before the grant cut was announced. There would then have to be time for the local authority to react. To achieve a full-year effect in a half year would need much more severe expenditure cuts. To achieve the required saving, for example, would mean double the number of full-year staff cuts. If staff cuts were chosen, it would mean heavy redundancy payments and would produce the silly situation of staff being sacked one year and being re-engaged at the beginning of the ensuing financial year. If institutions such as old people's homes, children's homes and libraries had to be closed, they would have to be reopened after a period. That is a wildly inefficient, extravagant and wasteful way of enforcing local authority expenditure reductions. It also leaves local authorities in a situation of complete uncertainty.
Local authorities can fix the rates legally and properly at the start of the financial year, but they cannot be sure that they will not fall foul, later, of the Secretary of State's double-barrelled attack and lose their grant income. That runs counter to what the Government said in their Green Paper, "Alternatives to Domestic Rates":
To budget sensibly and tightly, local authorities need to be able to predict their income and their cash flow with reasonable precision.
The Bill clearly takes that reasonable precision from local authorities.
I am sorry that the Secretary of State should try to conceal his nutcracker approach to local authorities. When the Secretary of State announced the Bill on 16 December 1981 I suggested that he was taking unprecedented powers to control the spending of individual local authorities. He then said in reply:
The hon. Gentleman has not understood the announcement that I made earlier today if he believes that I am trying to control individual local authority expenditure."—[Official Report, 16 December 1981; Vol. 15, c. 313.]
I am not alone in believing that. I have with me the Association of Metropolitan Authorities, the Association of District Councils, the Association of County Councils and the Chartered Institute of Public Finance and Accountancy, all of which take the view that the Bill constitutes a powerful weapon to control spending by


individual councils through the deliberate use of the grant penalty. That is in sharp contrast to assurances given by Ministers.
On the Second Reading of the Local Government, Planning and Land Bill 1980 the Secretary of State said:
The new system in no way sets limits to what an authority spends, nor does it fix the level of an authority's rates. Those decisions remain with the authority."—[Official Report, 5 February 1980; Vol. 978, c. 251.]
The Minister for Local Government and Environmental Services went further on Report. He said even more clearly that it is
a matter for individual local authorities and their councillors as to what their expenditure decisions are. It is their choice between services, their choice as to the volume of expenditure on those services, and their choice as to the rate levels that they decide to impose."—[Official Report, 8 July 1980; Vol. 987, c. 313–14.]
It may be argued that the Bill in no way interferes with that freedom and that ostensibly, I accept it does not. However, those choices are exercisable only if a local authority exercises them in such a way as to meet the approval of the Secretary of State. If it exercises a spending choice that is not approved, down will come the penalty of the Secretary of State's removal of grant. For Ministers to say that there is still freedom under the Bill is to imply that the freedom exists provided only that it meets with approval by Ministers. It is rather like the freedom that the Polish Government are offering to the Polish trade unions. It is utterly inappropriate for relations between central and local government in Britain. Such an approach will force local councils to become the creatures of Whitehall, and I and my colleagues in the Social Democratic Party reject it.
It is also worth reminding ourselves that the idea of grant-related expenditure assessments is a poor way in which to fix targets for local authority spending. It is also worth remembering that Ministers gave repeated assurances that it would not be used for such a purpose but would be used only for grant allocation. Those assurances seem to have been abandoned. However, the grant-related expenditure system is bad enough for grant allocation purposes. It is arbitrary, suspect and unreliable. It produces extraordinary variations between one authority and another, variations that are quite inexplicable and quite unrelated to spending needs.
The hon. Member for Greenwich (Mr. Barnett) referred to some of the difficulties in the borough that he and I have the honour to represent. We should remind ourselves of those figures. The grant-related expenditure assessment for Greenwich per head of the population for the current financial year is £158. That is by far the lowest in inner London. It is less than half the figure in Camden, and it is considerably lower than in boroughs such as Westminster and Kensington and Chelsea, which are not noted for their areas of deprivation. If we compare the grant-related expenditure assessment for Greenwich at £32·2 million for the current year with the council's estimate of over £51 million, we find that the spending is 60 per cent. higher than the assessment. That shows how unreal the figures are.
If one considers one service—social services—the grant-related expenditure assessment is £9·8 million and the council's current spending is £18 million. That again shows the unreality of the approach. The figures show that the GREA approach is unsuitable as a basis for targets for local authority spending. The idea that a group of

mandarins in Marsham Street can know what it is right for individual local authorities to spend from Land's End to John o' Groats is dangerous nonsense.
I am not persuaded by the Secretary of State that the Audit Commission is somehow a tremendous extra safeguard for local democracy. I always understood that the statutory independence of district auditors from central and local government was a reasonable safeguard for ratepayers. I am not persuaded by the Secretary of State's assurances to the contrary that the proposed commission will not be in a very different position.
The Secretary of State will appoint the chairman, deputy chairman and all the members. He will have the power to fix fees, to require an extraordinary audit and to direct the commission as to the discharge of its functions. All those factors make the commission resemble not an independent watchdog on behalf of local electors but a creature of the Secretary of State. I am not opposed to the idea of a commission, but it would be a much more effective operation if it did not have the overtones of central control.
The Social Democratic Party certainly does not suggest that everything in local government is perfect. We accept that some local councillors are much more interested in sparking off knock-down, "drag-'em-out" fights with the Government than in running humdrum, vital services for local people. However, those problems will not be solved by making local government the whipping boy for mistakes by the Government in economic management. The Social Democratic Party does not defend overspending by local authorities. We do not defend unreasonably high rate burdens, but we believe that those problems are best dealt with by local electors and not by the Secretary of State. We wish to see local government made much more accountable downwards to the people that it represents. The Bill does exactly the opposite. It makes local government more accountable upward to Whitehall.
My right hon. and hon. Friends and I reject that approach totally and we shall vote against the Bill tonight with enthusiasm.

Dr. Brian Mawhinney: The House will have listened with interest to the position of the Social Democratic Party. It is against virtually everything. It says "We do not like this, we do not like that, we do not like the other." However, it has spared us from information about what it likes, with one exception. The hon. Member for Woolwich, East (Mr. Cartwright) spoke kindly about the old rate support grant. I suppose that the message that goes out from the House tonight about the SDP is that it favours a system whereby the more one spends, the more one gets, and the less one spends, the less one gets. No doubt British people will take due note of that implication.

Mr. Cartwright: I am sure that the hon. Gentleman does not wish to misrepresent me. In comparison with the current complex system that has been wished on local government, the rate support grant system, difficult though it was, was much better in retrospect than that which we now have.

Dr. Mawhinney: The House will have noted that I took great care not to misrepresent what the hon. Gentleman did not say.
We listened to an interesting and typical speech from the right hon. Member for Manchester, Ardwick (Mr.


Kaufman). It was long on rhetoric and indignation and short on support on the sparsely populated Opposition Benches behind him. It was not clear to those of us who heard his speech exactly why, near the beginning, he tried to link in his mind the Secretary of State with that worthy bird, the hawk. However, by the end of his speech, the matter was quite clear. He did so because he knew that the impact and logic of his speech had the dimensions of a sparrow.
The right hon. Member for Ardwick quoted objections from local authority associations and other professional bodies—those who have a political or vested interest in the Bill. Their views are important and must be considered. However, the right hon. Gentleman did not mention the views of the ratepayers. I suggest that ratepayers will welcome the Bill.
I found it hard to take the right hon. Gentleman seriously when he talked about the constitutional crisis that was being precipitated by the Bill. The Bill is being forced on the House and on Britain not because the Government are trying to reverse the long-standing constitutional relationship between central and local government, but because they wish to reintroduce the status quo. It has long been a convention in Britain that if there is a difference of opinion between local and central Government, it is central Government that has the overriding responsibility for the control of public spending. In local government finance, that understanding was monitored by a combination of guidance through the rate support grant and a reliance on responsible behaviour by local authorities. That principle was endorsed by the right hon. Member for Ardwick as short a time ago as September 1981. Central Government have the ultimate responsibility.
That relationship was enjoyed by the Labour Government, who had co-operation from local authorities—including many Conservative-controlled authorities—in holding local government expenditure within reasonable limits, but the situation changed in 1979. A minority of Labour-controlled councils have deliberately decided to challenge the primacy of central Government in determining levels of public expenditure. No Government, if they seek objectively and honestly to govern, can view the challenge with equanimity. The extra spending involved means that extra rates have to be levied and jobs are put at risk. Hon. Members have mentioned constitutional implications and professional bodies, but the debate has not been long on discussing what happens to our constituents.
Industrialists in Peterborough together wrote a letter, which is without precedent, to my local council. They said that more unjustified rate increases would cost jobs. Because of its spending policies, Peterborough city council has lost over £½ million in Government grants. Until recently it maintained a non-redundancy policy, which has a long-term catastrophic effect on rates for ordinary people. That is what is behind the Bill.
A survey published by the London Chamber of Commerce and Industry on 2 December 1981 revealed that 38 per cent. of the companies responding had already reduced staff because of high rates, 17 per cent. had moved elsewhere to avoid high rates, and 16 per cent. had decided to close their businesses in London. About 37 per cent. stated that they would reduce staff if rates rose by

more than 25 per cent. in the next two years, and nearly 30 per cent. claimed that they would be forced by such increases to close.

Mr. Allen McKay: Is not the hon. Gentleman's broad-brush approach wrong? In my constituency, even if we had no rates at all, few jobs would be saved. For industries such as steel it is not rates but high energy costs and interest and exchange rates that are the problem.

Dr. Mawhinney: A variety of economic pressures on businesses and industry combine in different forms in different areas to put pressure on profitability, investment and jobs, including high, indefensible rates. I have given examples of where people in the forefront of business and industry have made that clear.
I welcome the proposed Audit Commission in the interests of ordinary people. My right hon. Friend the Secretary of State made clear that the commission would not dictate policies. It would not have the opportunity to force policy on local authorities; it would simply raise questions about effectiveness, efficiency and economy. My constituents are more worried about not getting value for money than about local government policies. The Audit Commission would address itself to that issue. I fail to see why an independent and professional assessment of the job that officers and members of a local authority do should cause concern to anyone, although I take the point raised by my hon. Friend the Member for Carlton (Mr. Holland).
My local authority understands the concern about value for money. With the co-operation of the leader of the council, last June I set up a committee of business men and industrialists to examine the working and efficiency of the Peterborough city council. Its report is to be made public on Wednesday. The House will forgive me if I do not let it into the secrets of the report before they are made available to my constituents, but I will say that it justified setting up the committee. My right hon. Friend will take heart from its findings. It is fallacious to believe that people do not want value for money. They will welcome the move, even if those with a vested interest express reservations.
I, too, hope that the Bill will be an interim measure, at least in part. I should like to see a thorough review of the rating system. It needs to be replaced. It is fundamentally unfair, if for no other reason than that it takes no account of a person's ability to pay. The base needs to be broadened. I support the measure with, I believe, more enthusiasm than many of my colleagues. I believe that it is what the people want, even if it is not what the pressure groups want. I hope that it will not be a substitute for a more thorough-going review.

Dr. Edmund Marshall: The crux of the issue before the House is whether we want local accountability and democracy to remain in the working of local government.
For many years local accountability has been eroded for the simple reason that by successive Acts of Parliament local authorities have been given more and more responsibilities, duties and services to perform, but have not been given a modern system of local government finance. The system of financing local government is


anachronous and, without great Government subventions, will not support the services that have to be provided by local authorities. When we have a system of local government finance that does not enable local authorities financially to stand on their own feet, we run into the danger of
He who pays the piper may call the tune
and central Government become more and more influential in determining everything that happens in local government.
The trend has continued for decades, but it has been accelerated and given new twists under this Government. For political reasons, they wish to force local authorities to follow their national policies. That is partly because of the Government's obsession with monetarist economic theory and its impact on the spending policies of local authorities. During the past year, that additional twist of the screw by central Government has increasingly taken place because more local authorities have been controlled by the Labour Party rather than the Conservative Party. That is an added political dimension to the erosion of local authority autonomy.
The Bill will abolish supplementary rates and precepts, but it includes a provision in part II to extend the power of the Secretary of State to make supplementary cuts in grants to local authorities. As a result, local authorities will be caught between the opposite workings of the two provisions. Either they will become puppets of central Government—agencies carrying out Government policies—or, under the working of part II of the Bill, they will be in danger of becoming insolvent.
My right hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman) referred to the historic origins of supplementary rating. My researches do not go back as far as his, but I find that the power of rating authorities throughout England and Wales to levy supplementary rates was made general by the Rating and Valuation Act 1925. That was extended to precepting authorities, the county councils, by the Local Government Act 1972. It is of interest that both those Acts were introduced by Conservative Governments. I do not know why they introduced them, but the present Conservative Government are trying to undermine the handiwork of their own predecessors.
As has been mentioned a number of times in the debate, until this year supplementary rates and precepts were comparatively rare. My right hon. Friend said that one reason why supplementary rates had become more numerous was the impact of the cuts in Government grants. Another simple factor has led to more supplementary rates this year. In local elections last May the control of many county councils in England and Wales changed, and the new councils and their leaders found themselves saddled with budgets drawn up by their predecessors who had been defeated at the polls. It is strange that local elections are held in May, while the budget and rates for the succeeding year are fixed by the outgoing council before the beginning of April. It is an anomalous position that a political party gaining control of a county council is bound by the financial strategy and decisions of its predecessor that was rejected at the polls. However, until now it has had some flexibility in the levying of supplementary rates.
As politicians, we know the strange way in which the fixing of rates immediately before an election affects the rate level. The party controlling a local authority is

tempted to set an artificially low rate to court popularity at the polls. If it is defeated, the incoming party is saddled not only with its opponent's budget but with an artificially low rate. Political parties which know that they will lose office at a forthcoming election have a great temptation to levy an artificially low rate to cause embarrassment to another political party taking control. The abolition of the supplementary rate and precept will undermine the scope of new, democratically elected councils in carrying out their policies during the first year of office.
One way that that anomaly can be corrected is by reconsidering the timing of local authority elections. Why should they be held each May? Would it not be more sensible for them to be held before the budget-making process begins?

Mr. Albert Roberts: My hon. Friend is trying to outline a case. It would be far better if he named the authority. The point that he is making is quite correct, and it applies to West Yorkshire.

Dr. Marshall: My point applies to many authorities which have had to levy a supplementary rate during recent months. My researches show that local elections have not always been held in the spring. That has been the regular pattern only during the last 33 or 34 years. Under the Local Government Act 1933, borough council elections in both county and municipal boroughs were held in the autumn in October and November, whereas county councils were elected in March and urban and rural district councils in April. We must examine the possibility of returning to a system of local government elections in either September or October each year. That would have repercussions on the annual calendar of local government and also for electoral registration. If we are to maintain any semblance of local democracy in local government while abolishing supplementary rates and precepts, we must determine the best time of year to hold local elections.
I wish to refer briefly to the Bill's definition of local authority expenditure for the purposes of part II, which extends the penalising powers of the Secretary of State when he is not satisfied that local authorities are sufficiently reducing their expenditure. Currently, the expenditure of rating authorities includes money paid to parish councils within their areas through parish precepts. It also includes payments made to internal drainage boards under section 81 of the Land Drainage Act 1976. The key point is that in both those cases the amounts spent are wholly beyond the control of the rating authority, which is the district council.
In some areas, where there are many internal drainage districts, the amounts of money involved can be considerable. Drainage rating is complex, and I shall not deal with it in detail, but the vital point is that under section 81 of the Land Drainage Act 1976, it is possible for internal drainage boards, when sending out their own drainage rate demands, to reach agreement with the district councils in their areas so that payments en bloc can be made direct by the district councils to the drainage boards, equivalent in total to the amount that would be collected from individual ratepayers.
The amounts paid in drainage precepts have been included by the Government in the sum total of district councils' expenditure. The Boothferry borough, which covers a large part of my constituency, is in a position


where, although the local authority, which is Conservative-controlled, has tried to dance to the tune of the Secretary of State and to cut its expenditure substantially, it has been unable to meet the required levels of cutting because the expenditure in precepts to drainage boards has increased and brought the total of district council expenditure well above the prescribed limits. Of course, we all know that drainage in some parts of Britain is vital. Unless we increase expenditure on drainage, an increasingly large part of Britain will be in danger of inundation.
Recent events have shown that it is wrong to include within the definition of local authority expenditure payments made to internal drainage authorities. If the Government persist in maintaining that those payments should be included in that expenditure, then increasingly councils will be forced to cancel their section 81 agreements and drainage boards will be issuing the same drainage rate demands as they used to issue before reaching agreements with the local authorities.
Both the examples that I have given serve to show how the flexibility and local accountability of district councils and county councils are being undermined yet further as a result of the Government's policies. There is no doubt that in the provisions of the Bill, particularly in part II, we are being asked, as a House, further to cut the sense of local responsibility of English and Welsh local government. If we value that local accountability, we have no choice but to throw this Bill out.

Mr. W. Benyon: Looking at the empty Benches on both sides of the House, who would imagine that we are discussing a matter of major constitutional importance? Many hon. Members have already fallen into the tempting trap of dealing with the matter entirely on a local basis. The spokesman for the Social Democratic Party, the hon. Member for Woolwich, East (Mr. Cartwright), did that, as did the right hon. Member for Norwich, North (Mr. Ennals) and my hon. Friend the Member for Peterborough (Dr. Mawhinney). It is even more tempting for me to do that because my local authority has been heavily penalised by these arrangements. However, I shall resist that temptation and deal with the Bill in its general form.
The real background to the Bill was hinted at by the hon. Member for Goole (Dr. Marshall), and it is very simple. The tasks imposed on local government by successive Governments over the past 100 years have created a level of expenditure which far outstrips the capacity of the rating system to finance. As a result, the burden has had to be shouldered more and more by central Government acting on behalf of the taxpayer.
It has always seemed to me that the only correct division of responsibility under the present system gives Parliament the guardianship of the taxpayers' money and a similar responsibility to the local council about the ratepayers' money. I thought that Her Majesty's Government took that view. My hon. Friend the Minister for Local Government and Environmental Services, who will reply to the debate, made a statement on 8 July 1980, which has already been quoted in the debate. He said that it was their choice between the services, their choice as to the volume of expenditure on those services and their

choice as to the rate levels they decide to impose. When the Minister replies he must reconcile that statement to the reply given to my interjection earlier in the debate. As I then said, it seems to me that under these arrangements a future Secretary of State will be able to decide the rate if he wants to. That goes to the root of the matter, and it would destroy the partnership and relationship that has existed for many years.
The Guardian stated this morning that the principle of the supplementary rate goes back to 1601. Although I have not had time to check that date, it certainly goes back a long way, and it is incumbent on a Conservative Government, in particular, to explain why that privilage and right should be abolished.
Parliament must obviously lay down the rules under which local finance can be raised, but once that has happened and once it goes further than that and either explicitly or implicitly controls the level at which local taxes are raised, the independence of local government ceases. It would be much more honest to accept that and to revert to some form of direct rule from Whitehall. The precedents of the medieval barons and Cromwellian major-generals are not exactly encouraging in that respect but perhaps we could sugar the pill by giving the local regional controller a sort of local advisory body which he would receive from time to time in a lofty and arrogant state.
It is because I believe so passionately in the importance of local government as an integral part of our constitution that I oppose this measure. There is a degree of inevitability in what we are considering. The rot started with the Labour Government's policy towards education a long time ago, and when I listened to the right hon. Members for Manchester, Ardwick (Mr. Kaufman) and Norwich, North, it was as if Satan was rebuking sin, because it was they who started all this—they sowed the wind, and today we are reaping the whirlwind. However, of course, the situation was compounded by the Government's Housing (Amendment) Act 1980 and the Local Government, Planning and Land Act 1980 was only just all right. A reason why I was prepared to support the Government on that occasion was the remark made by my hon. Friend the Minister for Local Government and Environmental Services, which I have just quoted. Now the Bill knocks just one more prop out of what is a tottering edifice.
The real danger is that whenever a pressure group dislikes something that local government does it now goes over the head of local government to central Government. That is the real weakness of the present situation; it destroys the status and responsibility of local government. That is being done by a Conservative Government at a time when the official Opposition seek one-chamber Government in Britain; when all talk of constitutional reform comes to nothing—the Cabinet is not interested, the Prime Minister is not interested and the Lord Chancellor says that he is interested but nothing happens.
On top of all that, the courts are relatively powerless to safeguard the rights of citizens. At this moment a Conservative Government hand to future extremists the weapon that we are discussing, and it is a very powerful weapon. We shall be told, as we always are, that this is simply to deal with a temporary situation, until action can be taken on the Green Paper, and that we shall have a new form of local government finance. However, we know, do we not, that tyranny always come in under the guise of


temporary provisions and that is why we dislike them so much. Therefore, the Bill is constitutionally wrong and it is also wrong financially, because it will encourage, as many hon. Members have already said, higher levels in the main rate precept.
Councils that are faced with penalties will safeguard their positions with a higher rate initially. If the provisions were restricted to the initial grant, which could be followed by a given penalty if the target were exceeded, the Bill might just be acceptable, but the part I procedure allied with the part II formula is uncertain and gives too much power to the Secretary of State.
The Bill is unnecessary. It is designed to catch a few over-spending authorities because, so the argument goes, they are pre-empting too much of the nation's resources. However, rate-borne inflation cannot be inflationary, because the budget is balanced. There need be no element of borrowing if the Government do not wish it to take place. That was cogently argued in a letter to The Times shortly before the House went into recess by Mr. Hepworth, the director of the Chartered Institute of Public Finance and Accountancy. He wrote:
Local government needs consistency. There is also evidence that reducing the amount of grant does cause local authorities to reduce expenditure. To use the existing levers of control and reduce grant aid is likely to produce the best overall result from the Government's point of view. It won't stop all the high spenders; but then no system will unless politcal power is removed from local government.
It is that last sentence that is the key to the issue that we are discussing. The Bill will not solve the problem of the high spenders unless power is removed totally from local government.
Thus we are faced with an unnecessary Bill. It is a Bill of dubious financial merit and a Bill which sets a dangerous constitutional precedent. It gives me no pleasure to say that it is not a Conservative measure. As my hon. Friend the Member for Devizes (Mr. Morrison) said, it is a further advance on the road to centralism and it should be resisted. I shall resist it when the Division is called.

Mr. Stan Thorne: It is not often that I have the opportunity of agreeing with a Conservative Member, but I very much agree with the comments of the hon. Member for Buckingham (Mr. Benyon). However, I take him up on his reference to the Labour Government's education policy having some influence in a political sense on local government. No doubt the hon. Gentleman will remember the Conservative Government's Housing Finance Act 1972, which sought to interfere with local government practices. Further back than that we had the Education Act 1944.
The purpose of a national Government is to try to ensure that there is no lower standard of provision in certain areas in consequence of a dilatory attitude on the part of local government to that political service. Attempts have been made by Governments in the past to overcome that problem. The hon. Member for Buckingham referred to the absence of interested Members in the Chamber during this debate. I am surprised that not one Conservative Member who represents a Lancashire constituency is in the Chamber now. Indeed, there has not been one present throughout the greater part of the debate.
The Lancashire county council, the South Ribble borough council and the Preston borough council have all

made it abundantly clear that they are opposed to the Bill. Possibly the absence of Conservative Members representing Lancashire constituencies indicates that they will join the hon. Member for Buckingham and Opposition Members in voting against the Bill, in which circumstance their absence now and their attendance later will be worthwhile.
On 5 February 1980 the Secretary of State said:
The new system in no way sets limits to what an authority spends, nor does it fix the level of an authority's rates. Those decisions remain with the authority."—[Official Report, 5 February 1980; Vol. 978, c. 251.]
On 8 July his sidekick, or rather the Minister for Local Government and Environmental Services, said that
it is then a matter for individual local authorities and their councillors as to what their expenditure decisions are." —[Official Report, 8 July 1980; Vol. 988, c. 313.]
The Bill seriously threatens the autonomy and financial independence of local government, as was ably demonstrated by my right hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman), the Opposition's Front Bench spokesman, in opposing the Bill.
A shift has taken place since we last heard from the Secretary of State. It seems that we shall now have no supplementary rates, whereas we were to have referendums for supplementary rates. To withhold grant after a local authority has fixed its rates for the current financial year is possibly the most serious aspect of the Bill. I agree with the hon. Member for Buckingham that the basis of the centralisation of spending decisions is completely contrary to the historical growth of local government and the notion which some of us have, which is still important, that small is beautiful. It is contrary to ensuring that local government is able to do the job that it was established to do and which it should be permitted to do as far as possible in the absence of Government interference.
There is no doubt that the Bill raises a constitutional issue. Local government is virtually at the crossroads. That will be the position that will arise if the Bill is enacted. I wonder whether, unbeknown to my right hon. and hon. Friends, the Government consider that it might be best to administer health, housing, education, social services, transport and highways through an extension of Civil Service departments into towns and cities throughout Britain. That is the logic of this type of legislation, from which only a short step is required to abolish local government.
It is not to exaggerate to suggest that the Bill is a further move towards the corporate State. The justification for the Bill that is presented by the Government, and which I believe is unproven, is that local government has failed over the years to act responsibly in trying to meet Governments' financial targets. Those on the Government Front Bench have not spelt out detailed evidence to establish that justification for the Bill. Capital spending has been controlled by this and past Governments, and the rate support grant is determined by the Government.
If Governments place on local authorities the responsibility for cutting back to such an extent that local services are imperilled by those decisions, it is not surprising that they do not get from local government the response to their proposals that they anticipate. If a local authority is to plan its use of resources, it is surely essential that it has knowledge of the money that is to be made available.
The Secretary of State used the phrase "value for money". That is a concept that has always been open to considerable difficulty, because of the several value judgments that are involved. It is clear that the Government Front Bench consider that only one value judgment is relevant, and that is its. I question the validity of that approach. I much prefer to accept local government values in terms of the services that they need to provide within their communities than to accept the value judgments made by civil servants, who, with due respect to them, remain in London and take a completely different approach to the needs of some provincial towns and cities.
Many hon. Members have worked as councillors in local government. I served for six years on a local council. We were continuously faced with trying to meet needs on the basis of scarce resources. We had to determine our priorities. We may have got those priorities wrong from time to time, but there is no doubt that we were more able to judge the order of priorities locally than will be the case if the Bill becomes law.
Other hon. Members want to speak, so I shall attempt to draw my brief remarks to a conclusion. My right hon. Friend the Member for Ardwick pleased me when he said that if the Bill became law it would be repealed by the next Labour Government. I believe that we will have a good majority in 1984. [Interruption.] I thought that that would bring a cheer from Conservative Members.
The localised institutions that we have protected over the years in local government represent a value that we cannot afford to allow the architects of destruction sitting on the Government Benches to do anything about. I understand that they must get the Bill through by the end of March. It is a responsibility for all Opposition Members to ensure that that is not possible. We know the answer. There will be a guillotine and the measure will be forced through because the Government have a majority. There is a lesson in that for Opposition Members. I hope that when the Labour Government are elected they will have no compunction, given a majority, about reversing many of the trends that we have seen on the Government Benches over the past two to three years.
I remember the Minister for Local Government and Environmental Services and the Secretary of State for the Environment serving as the two chief spokesmen on the Aircraft and Shipbuilding Industries Bill during the Labour Government's term of office. They made some lengthy speeches, the gist of which often was that we were carrying out measures for which we had no mandate; they were unconstitutional, improper and so on. The Secretary of State has not spelt out where the mandate is for this measure in the 1979 Tory manifesto. Perhaps the Minister for Local Government and Environmental Services will tell us. No mention was made in the manifesto that the Government would introduce a Bill seriously to restrict the powers of local government to such an extent as to create the possibility of further moves towards a corporate State.
I hope that there will be a maximum attendance of hon. Members like the hon. Member for Buckingham in the No Lobby, so that even this Government will not be so foolish as to proceed with this measure.

Mr. Robin Squire: I had some sympathy with the earlier comments of the hon. Member for Preston,

South (Mr. Thorne), but I lost that sympathy rather easily when he spoke of guerrilla tactics during the night. Hon. Members are aware of what that means in practice. If there are defects in the Bill, the way to defeat them is by rational debate, not by hammering through the night.
There is a song that runs
What a difference a day makes".
In this case it is not a day, but just over a month. The House will be reassured when I say that I do not intend to sing that song. The difference is between the first and second Bills. I shed few tears at the non-appearance of the referendum proposals. They were, and remain, unfair in principle and in practice. They would have been costly and would have cut completely across the traditional relationship between the Government and local government. They will be largely unmourned by most people involved in the affairs of local authority financing.
Similarly, I can work up few tears about the ban on supplementary rates, although I listened with interest to several hon. Members who could. I say that as someone whose support of local government generally is well known. The ban will be a relief to my constituents, and certainly to my small business men, of whom there are a large number.
If we analyse why supplementary rates were ever used, we see that they come under two headings. The first is the change of control—the political decision. If that means that instead of changes being brought in in six months they are brought in in one year, with the inevitable consequence that should control change again the outgoing council will have a further six months' or a year's control, that is not the stuff of which dreams are made or about which fighting speeches are made. That is a comparatively small point.
The second heading is potentially more important. I shall grandly call it the mistake area, where councils have underestimated either price inflation or wage inflation, often through taking advice in exalted places at the beginning of the year. However, those instances are comparatively rare.
I welcome the Secretary of State's intention that if such a position were to arise in future the requirement would be on the local authority to repay that excess in the first quarter of the following year. That is important, because, as I suspect many hon. Members know, the local authority borrowing market in this country is sophisticated and enjoys a high reputation world-wide. It would be potentially damaging to our reputation as a capital market were that provision not to be included in the legislation. We need to reassure anyone who would lend to a local authority that his money is as safe as it was under the previous structure.
There is a good consequence of part I, in that there is a certainty of expenditure for local authorities at the beginning of the year. However, in part II the situation is a little different because of the effect of clause 4, which has attracted considerable attention from different speakers. With the abolition of supplementary rates, local authorities may find, some time after the year in question has commenced, that they are required to lose the grant. The consequences could be fairly major, not least because, with the ban on supplementary rates, they will be doubly penalised.
My hon. Friend the Member for Buckingham (Mr. Benyon) well described how the clause goes against a number of statements made in Committee on the 1979 Bill, now the 1980 Act, and indeed subsequent statements


about the Government's intentions. I regret that we have before us legislation that gives still greater centralising powers. I especially regret that the wide discretionary powers effectively mean that the volume of expenditure is no longer a realistic council decision. How many councils, currently in receipt of grants—we know that some are no longer in receipt of any grant—will risk jeopardising that grant? If we recognise that, we recognise that the essential decision is not being taken by the council itself.
I realise that I may be in a minority of Conservative Members in deploring that, but I believe that this needs to be stated. I believe that we can get round it without facing legislation of this nature. The essential difficulty arises because there is an inherent fallacy in basing control on grant-related expenditure assessments. These are the successors to the old rate support grant. Hon. Members will remember that they were used as a guide to who should receive grant or assistance from the Government, and the substance and size of that support. It was never intended, however, that they should serve as a control on expenditure. They were never intended to be a volume control.
The measurement of need may be very accurate. I grant to my right hon. Friend that the measurement of need may be better now than it has ever been. Within the mighty Wurlitzer of statistics, which is now part and parcel of block grants, we have assembled a most impressive measurement of need. Nevertheless, it is still an estimate, and I submit that some of the individual elements are not strong enough to stand up to the interpretation now effectively being placed upon them, especially if they are used to determine the direction of grant and to penalise local authorities when they seek to spend a little more or less on that assessment. That is its weakness, and that is where we make a false assumption.
In recognition of the fact that other hon. Members wish to speak I shall curtail my comments on this aspect of the matter, except to repeat that it is unfair to expect local authorities to make sound and sensible adjustments if they are advised well into a year—in June or July, let alone later—that a fairly large sum may have to be found.
To sum up on part II, I believe that local authorities should be in a position to be sure of their revenue when fixing budgets or, as the recent Green Paper "Alternatives To Domestic Rates" said:
To budget sensibly and tightly, local authorities need to be able to predict their income and their cash flow with reasonable precision.
I turn to part III and the Audit Commission. I should point out that I am a chartered accountant, but I have no possible way of benefiting in any shape or form from the proposals in this or indeed any part of the Bill. Here I part company to some extent from my hon. Friend the Member for Devizes (Mr. Morrison), because, as an erstwhile auditor, I can readily appreciate that there are some genuine benefits for local government in providing wider experience on the part of those carrying out the audit.
With the best will in the world, the existing direct audit, by its very nature, draws its experience from a narrow band. I shall pay full tribute later to that experience, but it is a very narrow band. There is therefore an obvious advantage in widening the audit to bring in the additional expertise and much more modern computer-based auditing techniques. That is not to say that these are not available to the district audit at present, but the sheer range of

experience which it cannot possibly have is an argument for recognising the inherent sense and soundness of the Government's main proposal.
Nevertheless, I do not wish to forget the district audit and I fear that there may be a danger of going almost too far the other way and losing the advantage of the local authority experience that the district audit has. I am rather glad that the decision is not mine, as I do not know how the new commission will determine when to have a district audit and when to have a private audit. I can well see how within the private audit it will choose which private auditor in the ordinary way, but it is difficult to see what yardstick it will adopt in deciding on that essential switch. However, that may become clear in my right hon. Friend's summing up or subsequently in Committee.
My other fear is that the powers at present set out for the direction of the Audit Commission by the Secretary of State seem to me quite wide. My own institute, the Institute of Chartered Accountants in England and Wales, in its submission on the consultation paper, said:
We believe that it would be inappropriate for the Secretaries of State to have any general power to give the Commission directions as to the discharge of its functions. Similarly we believe that the appointment of the Controller of Audit should be a matter for the Commission, not subject to the approval of the Secretary of State.
I believe that there is great value in that observation and I certainly sympathise with it.
I echo some of the points so well argued by my hon. Friend the Member for Carbon (Mr. Holland) who went much further and questioned the entire structure. I hope that the Government will look closely at his comments when the Bill goes to Committee.
I cannot resist drawing attention to something relating to the Audit Commission said by the right hon. Member for Manchester, Ardwick (Mr. Kaufman) in his amusing speech. Suddenly, as if pulling a rabbit out of a hat, he became conspiratorial and claimed that under clause 9 there was all the evidence of a political conspiracy. In the hope of excitement I turned to clause 9, which is the position in Scotland, plus political conspiracy. Clause 9 provides:
The Auditor should consider whether, in the public interest, he should make a report on any matter coming to his notice in the course of the audit in order that it may be considered by the body concerned or brought to the attention of the public,".
I wondered what could be so heavily political. Could it be clause 9(1)(a)? Surely not. Could it be clause 9(1)(b)? No. I realised that it must be subsection 1(c), which says that
the body whose accounts are being audited has made proper arrangements for securing economy, efficiency and effectiveness".
That rang a bell, and I realised that the right hon. Gentleman must have been saying that that was a political gesture.
I am sure that my right hon. Friend the Minister for Local Government and Environmental Services will draw attention to this when he sums up the debate, but the implication is that if one believes in those three qualities one would be well advised to recognise them as Conservative qualities. Whatever else they may be, they are certainly not qualities that appertain to the right hon. Member for Ardwick.
Although some of my comments may be light, I still believe that the Bill can be seen only as an interim measure. My right hon. Friend the Minister for Local Government and Environmental Services said as late as November 1981 that that was how he saw the Bill and how


he hoped that it would be considered. If it is not to be considered in that manner, a number of other questions and queries must be raised.
As well as that, we must see any measure of local government reform against an ideal. We have a Green Paper, on which I shall not comment, but we must see any short-term proposals against what we want to see as a final state of local authority financing. Those who have studied history and literature say that when Samuel Beckett wrote "Waiting for Godot" he took his inspiration from undertakings to reform local authority fund raising. Those who know the play will know that Godot never arrives. I have great faith that in this case something will arrive.
If the Government adopt a non-centralist approach and recognise the need to reconcile more accurately those who benefit from the services with those who pay for them, we shall be on the right track. Provided the Bill is interim I shall give it qualified support. However, if it is merely a further instalment down the centralist path it is as mistaken as the block grant proposals were originally in 1980 and will similarly fail in its overall aim.

Several Hon. Members: rose—

Mr. Deputy Speaker (Mr. Ernest Armstrong): Perhaps it will help the House if I inform it that five hon. Members are trying to catch my eye, and just over 50 minutes remain before the Front Bench speakers hope to catch Mr. Speaker's eye.

Mr. John McWilliam: I listened with interest to the speech of the hon. Member for Hornchurch (Mr. Squire) and particularly to his comments on clause 9 to which I shall return.
I was a member of the Scottish Commission for Local Authority Accounts and I am the only hon. Member who has served on such a body. It therefore gives me no great pleasure to attend the last rites of local government democracy, as we are doing this evening. The sparsity of the attendance in the Chamber is out of all proportion to the important and constitutional impact of this particularly obnoxious legislation.
The Bill is obnoxious because it flies in the face of the principles of democracy and because, ultimately, it will not achieve the objectives suggested by the Secretary of State of more efficient, compliant and democratic local government. The Bill will not achieve those objectives because it contains nothing that practically helps towards that end.
Indeed, I am surprised that the Secretary of State and his officials have failed to consider the Layfield commission's observations on the general points that the right hon. Gentleman made about this matter. I am even more surprised that, instead of referring back audit reports to the commission, the Bill proposes to refer them back to the courts. I would think that the Secretary of State has had enough of litigation and learnt that litigation will not necessarily help secure the kind of objectives that he wants to achieve.
I redirect the Secretary of State's attention to the Layfield report, particularly to paragraph 19 entitled "The Search for Efficiency". It says:
What is the most efficient and economical way of doing something is very often a question of judgment".
Paragraph 20 states:

We believe that the best way of promoting efficiency and securing value for money by external means is through the dissemination of comprehensive but intelligible information on the methods employed by local authorities and the results they achieve".
It does not say that that can be achieved by the litigious suggestions in the Bill.
The hon. Member for Hornchurch spoke amusingly about clause 9, but missed the point. He referred to clause 9(3). I should like to refer to clause 9(1)(c), which states:
that the body whose accounts are being audited has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources and in the carrying out of its policies.
I am sure that all hon. Members would laud those as good objectives and as things towards which we ought to strive.
I also remind the hon. Gentleman of the institution to which he belongs and of the protections which that institution can and cannot afford. It is all very well saying that something may be contrary to law and that something may not have been brought into account, but any auditor would be expected to produce those facts, and any auditor's report should do so.
However, when the Bill talks about
proper arrangements for securing economy, efficiency and effectiveness
in the use of resources, we come on to the subjective judgments of a local authority and the way in which it behaves. I suggest that the Secretary of State is in error here, because there is the danger that in reporting on those subjective judgments an auditor may well render himself liable under the law. For example, he could say some thing contestable that may not be true.
As I have already said, I was a member of the Commission for Local Authority Accounts in Scotland. Had the relevant legislation been framed in the same way as this legislation, I would not have consented to join such a body. I remind the House that a Conservative Secretary of State appointed me to it. I would not have joined it for two reasons. The first is that I have a young wife and family, and I could not afford the possibility of the sort of action that could accrue as a result of the provisions of clause 9(1)(c). Secondly, I do not approve of the destruction of local government democracy.
It pains me greatly that democracy in this country has come to such a sorry state that a clause such as this appears. I tell the House and, more notably, the ladies and gentlemen in the Civil Service box that the phrases about "economy, efficiency and effectiveness" were widely bandied about at the time of the Local Government (Scotland) Act 1973. The then Secretary of State for Scotland wisely did not incorporate such phrases into the legislation because he realised the dangers that they held, both for the auditors and for the members of the commission.
As a member of the Commission for Local Authority Accounts in Scotland, I can tell the House that those phrases appeared frequently in circulars from the Scottish Development Department, which seemed to assume that, because it had privilege arising from the protection of the Comptroller and Auditor General and the Secretary of State, we had similar privilege. We had no such privilege, nor will any auditor or commissioner who is appointed under the Bill.
I go further. As the Bill now stands, anyone who consents to be either an auditor or a commissioner is walking on dangerous territory if clause 9(1)(c) remains. He could be liable for heavy damages. I seriously advise


that, unless fundamental amendments are made to the Bill, no one presently employed by the local government audit service and no private auditor should become involved in any audit under the Bill. He will have no privilege whatever. He will be unable to say that a person has acted wrongly when he only thinks that a person may have acted wrongly. He has no defence and no privilege in law. The Bill is fundamentally defective in this area.
I began by saying that it gave me no pleasure to be present at the death rites of local government democracy. My only hope is that sufficient Conservative Members are as aware as I am of the dangers of central Government extending their tentacles further into the direct control of local authorities and further destroying the existing level of local democracy.

Mr. Michael Shersby: I listened with interest to the hon. Member for Blaydon (Mr. McWilliam), but I do not take such a pessimistic view of the Bill as he does. I do not believe that we are witnessing the death rites of local government. We are witnessing a scene in the Chamber where a Secretary of State is trying to grapple with the fact that local government expenditure now accounts for about 25 per cent. of all public expenditure and where, because of the action of several local authorities, he has striven to place before his colleagues in Parliament a proposal designed to deal with that action and to protect ratepayers who are disadvantaged by it. That is a serious position for any Secretary of State to face and for the House of Commons to have to consider. Therefore, we must approach the Bill with that in mind, put forward our views, express our reservations and see whether we can find ways to improve the position during the passage of the Bill.
We have heard much from hon. Members on both sides of the House about the Bill imposing important changes in the delegated powers given by Parliament to local authorities in various statutes. They have been described by my hon. Friend the Member for Buckingham (Mr. Benyon) and others as constitutional changes. That is not an inappropriate description of some parts of the Bill, but it is important to point out that there is nothing basically wrong in Parliament reviewing the powers under which local authorities operate or requiring them to conduct their financial affairs in a way that is acceptable to Parliament, from which they derive all their powers and their very existence.
In carrying out the review and considering the Bill, Parliament is exercising its powers properly. After all, local government has not assumed to itself powers to act independently of Parliament or parliamentary scrutiny. I am sure that most local government leaders accept that, but some commentators and hon. Members have lost sight of the fact that local government operates under a variety of statutes and Parliament has a responsibility to review them to make sure that they are up to date and meet the needs of modern society.
Of course, local government has a right to question proposed changes in its powers and practices, and every hon. Member will wish to consider carefully the objections that have been put forward. The question is whether the proposals in the Bill are acceptable to the House and appropriate to changing the powers under which local

government operates. I wish to comment briefly on the Bill as it stands, and I hope that it will be improved in Committee.
By abolishing the power of local authorities to levy supplementary rates my right hon. Friend the Secretary of State intends, as I understand it, to remove the fear and uncertainty to which domestic and commercial ratepayers have been subject in the past year. Such action is necessary because a comparatively small number of local authorities have pushed ahead with plans for public expenditure regardless of the exhortations of the Government or the ability of ratepayers suddenly to find an extra sum demanded by way of supplementary rate.
Every hon. Member must know that supplementary rates have caused considerable worry and even hardship to domestic ratepayers, particularly those just above the rate rebate level. As my hon. Friend the Member for Hornchurch (Mr. Squire) pointed out, the payment of a substantial extra sum during the year in respect of a supplementary rate has meant an unbudgeted on-cost for small businesses to the detriment of those businesses and representing a threat to their profitability and to jobs, particularly in areas such as Greater London, part of which I represent.
However, there are some dangers in abolishing the power of councils to make a supplementary rate. I am such that my right hon. Friend is aware of many of the dangers and has not brought his proposals before the House without weighing them in the balance, but I should like to spell out one or two of the problems.
There is a danger that some councils will be tempted to levy a rate that is higher than they need to meet their expenditure, because there would be no let-out if they overspent. There is also a danger for the prudent, responsible local authority that budgets to break even, without providing a contingency fund. Such councils, most of which, though not all, are Conservative-controlled, rightly believe that they should not take money from ratepayers until they need it, but any reduction in grant through clawback would mean that a council would quickly have to cut its expenditure rather than raise a small supplementary rate. That could mean that private contracts with house repair firms would have to be stopped immediately. I give that as an example of the flexibility of a local authority to meet such an eventuality. I hope, therefore, that these dangers will be fully considered in Committee and that a way will be found of taking account of them.
I come now to part II. We have discussed clause 4, in which the Secretary of State proposes to take power to reduce the amount given in grant after he has made the rate support grant announcement. It is a very sweeping power, and it appears to be retrospective. I hope that my hon. Friend in replying will spell out the reasons in more detail, because it is important that the House should know why the Secretary of State requires the retrospective aspect of those powers. Again, I am sure that the Committee will wish to scrutinise this matter carefully before agreeing to it.
In paragraph (cc), which clause 4(1) seeks to insert in section 59(6) of the Local Government, Land and Planning Act 1980, the Secretary of State can seek to achieve
any reduction in the level of local authority expenditure … which he thinks necessary having regard to general economic conditions.


If that power has to be taken, I am rather sorry that it does not enable the Secretary of State to do the reverse, because circumstances could arise in which it was necessary. I believe that there is a danger that the use of this power, as set out in the Bill, could put a council in a "Catch-22" situation. For example, if the Secretary of State announces that the rate support grant for a local authority in any given year is so much, and the council budgets accordingly, and he subsequently announces that the grant is to be cut because of "general economic conditions", the council will have to cut expenditure immediately, because it cannot raise a supplementary rate. As I have said, this could cause real problems for a responsible local authority which has already cut expenditure to the bone, in line with the Government's target. It may have no option but to reduce or cut essential services. That aspect bothers me a great deal, quite apart from the general principle of any Secretary of State, irrespective of political party, having such sweeping powers to act without recourse to Parliament.
I wish to put forward a suggestion for a better way of dealing with the problem, and I am glad that my right hon. Friend the Secretary of State is present to hear what I say. Surely a better way of achieving his general aim would be for the Bill to make it a statutory duty for a local authority to set itself a cash limit and then stick to it. That would leave the decision with the local authority, acting in accordance with the generally prevailing conditions. The local authority would then be required by statute to stick to it. I hope that this suggestion will be considered carefully in Committee, because if the Bill were amended in that way the Secretary of State would still control the limits of local authority expenditure through his grant penalties, but it would at least avoid a situation in which he arbitrarily reduced grant after having announced what it was to be. I hope therefore that my right hon. Friend will consider this type of cash limit set by the local authority itself.
I am interested in the thinking behind part III, which proposes an Audit Commission. A number of leading councillors, some of them in London, believe that it is right to have more private sector auditors and that private sector expertise can be brought to bear on accounts. They welcome the provisions relating to public inspection of accounts, together with the right to challenge them, in clauses 11 to 14. However, I should like to be sure that the independence of the auditor will not be threatened by the fact that recourse to the courts could overturn his decision. The Committee will want to consider that point.
An opportunity is already provided in clause 11 for any elector or his representative to question the auditor about the accounts and to make objections. The hon. Member for Blaydon (Mr. McWilliam) described a situation where an accountant would be loth to express his view freely for fear of incurring some penalty under the law if an action was taken against him in the courts. It was my impression that the auditors were already the beneficiaries of some qualified privilege and that this would continue. The hon. Member for Blaydon shakes his head. It would be interesting if my right hon. Friend, in his reply, could deal with that point.
One of the most important points in the debate was made by my hon. Friend the Member for Carlton (Mr. Holland), who is well known for his dislike of all quangos.
I hope that the Secretary of State will consider carefully the suggestion that, instead of an Audit Commission appointed by the Secretary of State, the various professional institutions should be invited to appoint the chairman, vice-chairman and other officers of such a commission, that they should be responsible for running it, that they should report to Parliament and that they should be seen by Parliament, by the country and by local authorities to be absolutely and totally independent of Parliament, the Secretary of State or of any hint of ministerial privilege. That was a valid and important point. My hon. Friend the Member for Carlton has done the House a great service by drawing this matter to our attention.
Many people believe that this is a necessary Bill in the light of events in the past year. They are worried about the powers in clause 4, but they, like me, accept that Parliament has given certain delegated powers to local government and that Parliament and the Government cannot stand aside when they see, as all have seen, some local authorities during 1981 impose swingeing supplementary rates upon their unfortunate ratepayers. There must be stricter rules for the levying of rates and greater scrutiny by an Audit Commission of the way in which money is spent. The public must be reassured that local authorities will act responsibly and that they will not be able to increase local taxation through the rates half-way through the financial year in the manner that has been seen in the last year or so.
I believe that the Bill will ensure that local authorities, like every domestic and business ratepayer, work within their annual budgets. This will be good for all concerned. If there is any justification for hon. Members voting for the Bill on Second Reading, it should be the knowledge that many constituents have approached us to say that they cannot afford to pay the supplementary rate. They have asked hon. Members "Why don't you do something about it?" After all, they argue, Parliament lays down the rules under which local government operates. Those people look to Parliament to review the arrangements to see whether they are adequate in the light of present-day conditions.
We are responding to people throughout the country who say that Parliament should do something. The Secretary of State is attempting to do something. I am certain, knowing my right hon. Friend as I do, that he is as reluctant as any hon. Member to take the powers proposed in the Bill. Like any hon. Member, however, my right hon. Friend cannot stand idly by while many people, who are not well off, are so worried about their supplementary rates that they feel they cannot afford to heat their homes properly and cannot easily contemplate their budgeting for the year ahead. These are matters that hon. Members should have in mind when taking a decision tonight.

Mr. Stephen Ross: It is clear that the last few speeches have come from hon. Members with a knowledge of local government, and I welcome their contributions. The hon. Member for Uxbridge (Mr. Shersby) criticised the Bill, but then said that he felt that the Secretary of State was justified in taking the actions that he proposed.
Nearly all the speeches to which I have listened have talked about people's inability to pay rates or


supplementary rates, but we have had no reference to the numbers of ratepayers, including constituents of mine, who have been asking in the last few days for more work to be done clearing footpaths and roads. We have had no reference to local industries which expect roads to be repaired for their lorries. I am sure that that has happened in Wales, which has suffered so badly during the recent adverse weather conditions. I can assure the House that it has happened in my constituency. I get an enormous number of inquiries from small businesses asking for help of one sort or another. We are not discussing a one-sided argument or a constant moan against the rates. People expect better services and want their local authorities to provide them. Unfortunately, in most cases the local authorities have not been financially able to do so.
I want especially to congratulate the hon. Member for Buckingham (Mr. Benyon). His was an honest speech. It is obvious that the hon. Gentleman feels very deeply about what he sees as the ultimate effect of the Bill. I, too, believe it to be unnecessary and dangerous. The ultimate effect may be far greater than is appreciated on the Treasury Bench.
I am opposed to the whole Bill, although I recognise that there has been some unnecessary and even wanton expenditure by a few local authorities, but the general public already have the answer. We have seen some of the results of local elections in the past 12 months and how those who, in the eyes of the public, have been guilty of exceeding their authority have suffered at the polls. At the end of the day, the public will call the tune and show their feelings in the best way possible, which is at the ballot box.
I hope that I am responsible. I am probably the only hon. Member who is also leader of a county council and will have to present a budget in a week or two. I have occupied that position for the past nine months, and I recall what happened when my party came to power and took over from a Conservative council which had drawn up a budget that was a bit too near the bone. Our predecessors had not left enough in our balances. Last summer, when we had first the clawback and then the penalty imposed upon us, it was necessary for us to look for savings or cuts of £2¾ million when in our balances we had less than £2 million.
Much as I should have hated the idea of being the first Liberal leader of a council to impose a supplementary rate, it seemed likely that we would have to introduce one, even though we had not spent anything new by then. If the Secretary of State had not changed the rules in September and introduced the GRE basis to replace the volume targets, we would have had to go for a supplementary rate because we would have moved into debt and would then have been trading illegally.
That position could arise again for local authorities in the coming year. That is why I say that it is wrong to remove the right to raise a supplementary rate. There can be excellent reasons why an authority should go to the public and say that it is obliged to raise such a rate. There might be times when it had massive public support for doing so. The public might ask the council what it was doing about unemployment and about some of the damage caused by recent disasters. They would much prefer the local authority to levy a 3p or 4p rate to raise the necessary money to perform some job than to borrow it at an interest rate of 15 per cent. or more and have to find that money in the next financial year.
There are times when a local authority, if it appealed to the public properly, would be encouraged by electorate to levy a supplementary rate. Therefore, it is wrong to do away with supplementary rates. I am sorry that the local authority associations—the ACC and the Association of District County Councils—seem to have rejected that argument and to have accepted a sort of compromise in saying "All right, let us do away with the supplementary rate and have a real go at part II". They are wrong. We should fight to the bitter end.
No responsible authority wants to levy a supplementary rate, but there are occasions—we are going through periods of high inflation—when the unexpected happen and a local authority might have to do so, and it might be the right thing to do. It is a pity to allow that power to go without a real fight. I hope that there will be one.
Local authorities will now undoubtedly be overcautious and will build up their balances to protect themselves against a rainy day. My council feels that that will be necessary if we are to get through the coming financial year and if part II becomes law. Frankly, we do not know where we stand. If we have a clawback and then further penalties, we shall need sufficient balances to meet that. That, surely, is prudent financing.
The uncertainty of part II is diabolical. It will mean building up against possible future clawbacks or perhaps grant abatement, should the Secretary of State so decide. We shall not know about that until June at the earliest. That was the time last year. We did not know about the change of policy until September, when we had already put wheels in motion to raise a supplementary rate. Thank God we were able to cancel it, but that cost money.
There is a further difficulty, which I shall put directly to the Minister, because only he can answer it. In the council chamber last week I received a note from my county treasurer. Incidentally, I pay tribute to all county treasurers and treasurers of local authorities because, they are without doubt, very able and responsible people and we value their advice. His note said:
We have just received a message from the ACC's financial advisers that the DoE have made some sort of error in the data they have used in the provisional GREs of 21st December.
Perhaps they "skewed" them wrongly.
The DoE are unable (or unwilling) to give details yet but warn that it could be significant for some authorities.
The RSG order comes up on 25th January—exactly seven days before our Budget meeting and could mess up our strategy.
Is there any chance that the Minister can give us the information that he apparently will not give to the ACC? Has an error been made in the calculation of GREs, and will we at the last minute find a further clawback of money of which we did not know before? That would be diabolical, because we are already far advanced in our plans for setting the rate. We very much hope that it will be within the GRE limits and within the guidelines set out by the Secretary of State. I can promise the Minister that we shall not spend more money than is prudent in our view.
I recently attended a committee meeting—and this is typical—because I thought I had found something which could be cut. Our amenities and leisure committee wanted to appoint a site and monuments officer. I went in to the meeting hot foot to say that we could probably do without such an appointment, but the county librarian read me a letter from the Department of the Environment which made clear that the Secretary of State wants us to make such an appointment. The letter stated, 


There is no conflict to be seen between this initiative by the Inspectorate of Ancient Monuments and the Secretary of State's call for local authorities to monitor closely expenditure and staffing levels. For, in making this call, the Secretary of State's aim was to promote greater interest and a better balanced debate at local level on the relation of manpower and resources in the financial situation. It was not his intention to inhibit developments in this important area of our work.
—namely, the protection of county sites and monuments. End of story. We are appointing a county sites and monuments officer. The Department of the Environment is funding half of the money for one year but after that the expenditure is totally ours. I am all in favour of recording our sites and monuments. However, it takes the ground from under one's feet when officers are able to read out such letters.
I am opposed to part II. It is far too uncertain and some changes must be made to the Bill. It is unfair to leave local authorities in the dark about what the future may hold.
When part III was first announced by the Minister I thought that there might be something in it. However, the more I look at it the more I feel that it is unnecessary. The present situation works pretty well. Local authorities have cost-effectiveness committees and manpower watches and the local authorities management services and computer committee gives us all the advice that we need. It is against current thinking to set up another such body and it is unnecessary. Hon. Members from both sides of the House have criticised the Audit Commission. The chartered accountants Arthur Young, McLelland and Moores are a nationally known firm and they have produced a good document about the Audit Commission. There is much criticism of the proposal, although the firm is in favour of it. I hope that there will be changes in the method of appointment of its members. Nevertheless, the com-mission is unnecessary. On the whole, local government is desperately trying to keep within the Government's guidelines, as it has always tried to do. Central Government should show more faith in local government. Above all, a Conservative Government should have more faith in locally elected representatives. It is a tragedy that a party that has always talked about devolving power and giving more responsibility at a local level should—as the hon. Member for Buckingham clearly stated—take such power away.

Mr. Anthony Steen: All the ratepayers who are crammed into the Strangers' Gallery and all those who are listening to the debate on the radio, with their ears to the speakers, must be avidly trying to gather whether they will get better value for money as a result of the Bill. All ratepayers must be asking themselves whether they will get a better service for their local authority's expenditure. That is at the heart of the Bill and that is what ratepayers are concerned about. It is also a question for the Audit Commission. It must ask itself whether it can find a way of giving ratepayers better value for money.
If the Audit Commission sees that ratepayers will get better value if the local authority contracts a service out to private enterprise, or that there is no need for a service, it should be able to say so. There is no point in setting up another quango if it has to remain silent. It must have a

voice with which to speak up and to say which questions should be answered by local authorities.
If the Audit Commission sees that a local authority is not buying the best available, and continues to operate costly services, services that have a bad performance record, or services that private enterprise is likely to carry out more efficiently and economically, it should be able to say so, even if the local authority ultimately has to decide whether to take that advice.
In response to a question, the Secretary of State blurred whether the auditors could question the prudence of local authorities. I hope that the Minister will let us know whether the Audit Commission can question a local authority's wisdom, even though it is for the local authority ultimately to decide what it wants to do. The Audit Commission's job should be not just to see that current public services are maintained, but to satisfy itself that the level of efficiency needs the present number of staff. It should satisfy itself that the rise in the number of local authority employees—from 2,154,000 in 1965, to 3,013,000 in 1980—is justified. It will need to consider whether the provision of more social and community workers has resulted in better community relations. It will need to satisfy itself that the provision of more planners has helped to reduce inner city decay. It must consider whether matters have become worse or better.
Why can it not remind the local authority that private firms are less at the unions' mercy, that they benefit from commercial experience by carrying out the jobs for which they contract, and that there would be a reduction in the number of public officials on the local authority payroll?
The Audit Commission should also be able to consider the number of working days lost because of industrial disputes in local authorities. We know that in 1977 1,236,000 days were lost in industrial disputes. In 1979, 2,563,000 days were lost. In 1980, the first real year of the Conservative Government, only 261,000 days were lost as a result of industrial disputes. The commission should consider that matter.
The commission must also have regard to what is happening in other local authorities such as Southend, which my hon. Friend the Member for Reading, North (Mr. Durant) mentioned. He said that the council is saving £500,000 a year by utilising private contractors for cleansing services and refuse collection. Similar arrangements in Liverpool would lop £1 million from the council's £6 million annual bill, which includes nearly £300,000 for the administration of cleansing services. With public sector spending in excess of £1 billion a year for cleaning services and local authorities spending a further £300 million a year on internal cleaning, there is great scope for saving money and for the private entrepreneur.
Nor should the Audit Commission confine its observation to local authorities who switch from private to public sector only for refuse collection. Private firms can keep roads gritted. We know what has happened during the recent appalling weather. The failure of the Liverpool city council to clean the side streets was disgraceful. We wish to see more private enterprise cleaning the side roads and keeping them gritted. Private enterprise can run school bus services, run day nurseries, maintain street lighting, erect bus shelters, organise grass verge cutting and maintain street signs.
McDonalds, the hamburger chain, provides varied and nutritious school meals in one American State. Would not our children prefer a McDonald's bill of fare to what comes out of most local authorities' kitchens?
The build-up in the numbers of professional people seeking refuge in the sanctuary of public service rather than competing in the cut and thrust of private enterprise is well illustrated by the numbers of architects currently employed in the public sector. In 1978, 1,351 architects and their assistants were employed by central Government, 1,569 were employed in nationalised industries and 6,537 were employed in local government. Those numbers could be reduced considerably if fewer buildings remained in public ownership, building control regulations were relaxed and private architects tendered for new public buildings rather than have them designed automatically by in-house teams.
As matters stand, local authorities are top-heavy with professionals. In addition to the architects and architectual assistants—Manchester metropolitan district employs 462 and Birmingham metropolitan district employs 197—many of the larger departments have staffs of structural engineers, structural engineers' assistants, quantity surveyors and their assistants, environmental engineers and their technicians, building surveyors, land surveyors and their respective assistants, and lawyers and their assistants. Manchester metropolitan district employs 111 lawyers and their assistants, whereas Birmingham metropolitan district employs 127. Manchester metropolitan district employs 150 planners whereas Birmingham metropolitan district employs 360. In Birmingham there are 960 accountants and financial assistants, and in Manchester 407. All are on the public payroll. They cost more and are often less effective than their counterparts in private practice. Will the Minister ensure that the Audit Commission can look at such things and that it will recognise the scope for private enterprise in community and social services?
Paid neighbourly care could result in daily visits by a local housewife to old and lonely people near at hand. With nearly 10 per cent. of the city's population of pensionable age, the welfare services cannot cope with anything more than emergencies, so it usually makes contact with less than 20 per cent. of the aged.
Most cities have suffered from managerial collapse at the town hall. They lack the skilled and far-sighted officials necessary for the long and sustained effort to cut costs, red tape and the numbers employed. Nor is it likely that those currently there have much desire to dismantle the vast edifice of public democracy which they have been responsible for building up and on which so many careers depend.
Those are the questions that I would expect the Audit Commission to ask. It is no good the Government just talking about private enterprise. We need action.

Mr. Dafydd Wigley: It is gratifying to see that Wales can be squeezed in at about 9.15 pm at the end of the debate, especially when hon. Members who have come in only in the middle of the debate are called and I have not missed a minute of it.
What has happend in Wales in the past week or so is pertinent to our debate. Hundreds of thousands of pounds have been spent by local authorities which could not have foreseen the severe weather conditions, which are

probably the worst for a generation or two. The Government tell the local authorities that if they wish they can undertake the extra work and that if expenditure goes over what a penny rate in the pound can produce—more on some interpretations—the Government may provide extra funds. That is the Government's formula for local authorities in Wales to deal with the unforeseen eventuality, and it is central to what we are debating.
The hon. Members for Buckingham (Mr. Benyon), for Preston, South (Mr. Thorne), for Blaydon (Mr. McWilliam), and speaker after speaker, have said that the Bill is a disaster and a threat to local government. Hitler's first action in Germany was to erode local government power. When democracy was reintroduced, the first step was to set up a strong system of decentralised government. Although the Secretary of State may not be aware of it, he is opening the door for the situation to be used in such a way.
Far from being an interim measure, I see the Bill as a clear sign that there is not the slightest possibility in this Parliament of steps being taken to scrap the local rating system. The progressive attack on local government over the past three years has got under one's skin. The Bill is an attempt to keep the pot boiling in the local authority witch hunt.
We should remember that we have placed many responsibilities on local authorities, and it is not surprising that it is more and more difficult for them to find the money for the services. However, over the past six years local authority expenditure on a constant basis has decreased by 21 per cent., although central Government expenditure has increased by 8 per cent., yet the venom in Bill after Bill is directed at local authorities and not at the Government.
Paragraph 11 of the White Paper published in September 1979, which deals with Government controls over local authorities, states:
Apart from the plethora of specific controls by Government departments over the activities of local authorities, many statutory duties have been placed upon them in the past. The Government's objective is to provide councils with greater local discretion and automony".
However, all we see is the further centralisation to which speaker after speaker has referred.
A constitutional sledgehammer is being used to crack an economic nut. How often are supplementary rate increases imposed? What proportion of local authority expenditure is covered by supplementary rate increases? The problem is minuscule compared with the door that we will open by the proposed change.
I am chiefly concerned about two areas of the Bill. First, local authorities will lose their flexibility in spending. We have heard what happens when control of a local authority passes from one party to another. It is the right of the incoming party to pursue its policies, whatever they may be. The Bill is slanted in one direction. If a radical party takes power and wishes to spend more it will be prevented from doing so, but if a reactionary party takes power and wishes to spend less it will not be prevented from doing so.
The words "economy" and "efficiency" have been used. The word "economy" has taken on a political meaning during recent months, as in the case of the GLC problems with transport. Therefore, if the commissioners and the Government are placing special emphasis on the


economic performance of duty, that is a declaration of political intent. It will be a political job for those appointed to monitor the system.
Local authorities will be placed in an impossible position. They will not know what their real income will be in the year for which they have to decide the level of rates. They will not know the exact amount that they will receive through grants. If they do not receive the full grant that they expect, they will be prevented from levying a supplementary rate. As a result, essential services will be cut, and that will be a severe body blow to all. To say that special temporary borrowing will be sufficient to overcome the problem puts all the powers into the hands of the Secretary of State. It is yet another element of the centralism in the Bill.
My other main area of concern relates to the Audit Commission. It is a centralising factor, as can be seen in schedule 1(3), which deals with the Secretary of State's powers to give directives to the commission. We shudder when we think of the possibilities in that direction. The key jobs will be controlled by the Secretary of State. The commission will be a central body that will pursue the policies of that Government to the detriment of local government.
There is not sufficient time to consider in detail many aspects of the Bill. They must be discussed in Committee. For example, there is a contradiction between clauses 11 and 22. Clause 11 advocates freedom of information, while clause 22 runs directly contrary to that. There is a question of public interest in clause 9(3) and its political implications.
Misgivings about the Bill have been expressed by every Conservative speaker bar two. If, despite that, the Bill goes ahead, certain safeguards must be provided. There must be a strong local voice on the Audit Commission. No power should be given to issue directives to local authorities about their policies. Local authorities must retain the right to appoint their auditors. The staff of the commission must be independent of the Government. There must be an appeal procedure against the decisions of the commission.
There are many issues that must be considered at great length. I hope that there will be an opportunity to do so in Committee. If we go down the proposed road without sufficient thought, we shall enter a new chapter in the political structure of the United Kingdom. That could lead to something that none of us has foreseen.

Mr. Gordon Oakes: Every English and Welsh Member has a vital and important interest in the debate. Almost certainly, their district and county councils—whatever their political complexion—are opposed to what the Bill attempts to achieve. The hon. Member for Buckingham (Mr. Benyon) made what I am sure the House will agree was a characteristically honest and courageous speech and he stated that it was surprising—I underline this—how few Members from both sides of the House had attended the debate. At least all four parties whose members have contributed to the debate will vote against the Bill. Conservative Members share a greater degree of blame in that they missed many excellent speeches from their colleagues and they were also opposed either in entirety, as the hon. Member for

Buckingham explained, or to most of the Bill's provisions. It should be astonishing, therefore, to see them in the Government Division Lobby. With the reservations they expressed, they must surely vote against the Bill or at least abstain.
As my right hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman) stated in his opening speech, it is not only hon. Members who oppose the Bill; the three local government associations—two of them Conservative and one Labour-controlled—all oppose the Bill and nearly every provision in it. Indeed, to varying degrees, they are opposed to every provision in it.
The Bill is opposed because it is of vital significance to local democracy as we have known it for decades—indeed, one could almost say for centuries. It cuts at the root of local democracy and breaks a constitutional partnership which has existed between central and local government and almost sacrifices it at the whim of the Secretary of State for the Environment.
Conservative Members showed courage and devotion to local government only a few weeks ago when they opposed the Secretary of State's No. 1 Bill. I admired that. How did they square themselves with voting for this Bill? The Secretary of State mentioned that there were some 30 authorities with supplementary rates but we still get supplementary bills. There was a Local Government and Planning (No. 1) and a (No. 2) Bill. Hon. Members in Committee found Nos. 3, 4 and 5 Bills being advanced. The same has again happened with this Bill—a No. 1 and a No. 2 Bill. How competent can the Department be? No other Department seems to have No. 1 and No. 2 Bills every time it attempts to do something.
The basic difference in the No. 1 Bill was that it proposed that local authorities should hold a referendum if they wanted to impose a second supplementary rate. Surely the Conservative Members who were so opposed to that were not merely opposed to the idea of a referendum. What they were opposed to and what their authorities had been saying to them was that the mischief of the Bill was the attack on local democracy. What does this Bill do? It takes out the referendum, but it does not allow a local authority even one supplementary rate, never mind a referendum, before a second supplementary rate.
There was talk among many Conservative Members about the interim nature of the Bill. I cannot find anything interim in it. If it were an interim Bill, it would have to be renewed before the House. There is nothing to say that it will be renewed. I hope that the Minister for Local Government and Environmental Services will consider what he said on 12 November 1981:
Against the background that we must proceed as speedily as possible with the issues involved in the Green Paper, we nevertheless see a need for interim measures. I emphasise, as did my right hon. Friend the Secretary of State, that there are interim proposals. It was suggested that these measures should be on a time limited basis, possibly renewable annually or triennially. My right hon. Friend responded very positively to that proposal."—[Official Report, 12 November 1981; Vol. 12 c. 745.]
That was the excuse used to try to get the Minister off the hook when so many of his hon. Friends opposed the No. 1 Bill.
The No. 2 Bill is far more damaging and far worse for local authorities and local democracy than the No. 1 Bill ever was.
A number of Conservative Members have said—this is so self-evident that I am amazed that the Government do


not recognise it—that the direct result of part I, especially coupled with part II, is that any prudent treasurer or chairman of a finance committee of a local authority—a job that I once held before I came to the House—will try to get the rate right the first time by building up balances for the authority. He will surely do that if he cannot levy a supplementary rate and if he can borrow only with the consent of the Secretary of State. It would be madness for the man or for the finance committee to do otherwise.
Let us remember—I am not punning on the word—the climate in which the budget decisions are being taken. Local authorities have had to face enormous expenditures for which they probably did not budget. Putting salt on the roads and filling holes in the roads are only minor parts of a typical iceberg for local authorities. In the constituency of the hon. Member for Liverpool, Wavertree (Mr. Steen) there has been devastation among council houses. They will have to be repaired. Those who live in those houses will become a charge and a burden on the social service department. I have no doubt that that is equally true of parts of the constituency represented by the hon. Member for Caernarvon (Mr. Wigley).
We depend on local authorities to carry out other functions. Many local authorities have had to look after and care for those who were trapped who did not live in their areas or in the constituencies of which they are part. We expect such things to happen. If I were back again as a chairman of a finance committee, I should bear very much in mind that I would not be able to raise a supplementary rate and that I could do nothing if I found myself in that difficult position.
Part I of the Bill is worse than the No. 1 Bill. I hope that Conservative Members who had the courage to oppose the No. 1 Bill will have the courage totally to oppose the No. 2 Bill.
I turn to the second part of the Bill, which begins with clause 4. It is a sort of Secretary of State general absolution clause for all sins past, present and future. It is one of the most retrospective pieces of legislation that I have ever seen before the House. It is naked retrospection because court decisions have been made against the right hon. Gentleman to which he has not yet responded or replied. He is using the House as an instrument to get him off the hook at the expense of crippling the financial arrangement between the Government and local authorities. That will be done at the expense of chaos for local authority finance committees throughout the country. There will be chaos for treasurers and finance committees.
The mischief of the proposal that is set out in clause 4 is that the Secretary of State will be able to intervene in the affairs of an authority and change the grant after the level of grant has been fixed during the course of the grant year.
The Secretary of State has said that it is terrible for a ratepayer suddenly to be faced with a supplementary rate. Very often the need for that supplementary rate has been created by the Government pruning too much the local authority's ability to expend. It will be even worse for the local authority if at any point in the grant year the Secretary of State can take a dislike to it, can intervene and can reduce the grant, coupled with the first three clauses that provide that no supplementary rate may be issued. Against that background we can see the mischief that the Bill is doing to the constitutional pattern between central Government and local authorities as we have known it.

The associations and practically every authority, regardless of political complexion, have completely and bitterly opposed the Bill.
Yet less than two years ago the Secretary of State said on Second Reading of the Local Government, Planning and Land (No. 2) Bill, on 5 February 1980:
The new system in no way sets limits to what an authority spends, nor does it fix the level of an authority's rates. Those decisions remain with the authority."—[Official Report, 5 February 1980; Vol. 978, c. 251.]
That is not so any more. We said during the course of that Bill that it was only a paving stone on the way to more draconian measures taken by the Government on a policy of centralism against local government and local democracy. I repeat to Conservative Members that, regardless of political complexion, the measures affect and tie in not only Labour controlled authorities, but Conservative controlled authorities, which have tried to be prudent but are utterly bewildered with the grant-related expenditure. It changes almost weekly and those authorities must read the gobbledegook that is meaningless to us and must be equally meaningless to the treasurer of a local authority.
I hope that when he replies the Minister for Local Government and Environmental Services does not look only at his own words, which have been often quoted by the hon. Member for Buckingham (Mr. Benyon), among others, but at his Secretary of State's words, and that he realises that he must eat those words because a number of his hon. Friends like the hon. Member for Buckingharn were seriously concerned on Report. I was on the Front Bench when it was happening and I saw that they were on the point not only of abstaining but of joining the Opposition to vote against that Bill. There were not one or two, but nearly a dozen. Because of the soothing words of the Minister of State, they backed the Government. Now, presumably, they are sorry. The Minister of State must explain to those hon. Members why those words are no longer true. There is no doubt that they are no longer true as a result of the Bill today.
I am not really surprised at the attention that part III ha s received. It contains important provisions, but compared to the damage done by parts I and II they are minor and minuscule provisions. However, even they are bitterly opposed by the local authority associations and by professional bodies. When he outlined the proposals, the Secretary of State had the impertinence to call to his aid the independence of the audit system, where the chairman of the Audit Commission is appointed by the Secretary a State. The deputy chairman is appointed by the Secretary of State. Every member of the Audit Commission appointed by the Secretary of State. That is significant with regard to quangos. One of the Conservative Members made a good point when he said that at least professional associations should have a say in decisions rather than the Secretary of State.
Worse still, the hands of that body are tied. Schedule 1(3)(1) enables the Secretary of State to give the commission
directions as to the discharge of its functions and the Commission shall give effect to any such directions.
So much for independence! The Secretary of Slate appoints the members and gives the directions. The commission has the power and the right not only to look at the ordinary accounts of the authority for the effectiveness and legality of its policy decisions, as in the


present audit arrangements, but clause 9(1)(c) goes further, as a number of hon. Members have said. It says that the auditor shall satisfy himself
that the body whose accounts are being audited has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources and in the carrying out of its policies.
That is not policy. It is management. The commission, set up by the Secretary of State, his creature, obeying his directions by statute, is looking not only at policy decisions but at management.
Under clause 19, powers are given to the commission to engage in studies. To me, studies always had an academic context, but now they have a more sinister one. If it studies something and issues a report which local authorities do not follow to the letter, what will happen to the local authorities? There is no true independence here.
When we discuss these provisions in Committee, I hope that the Secretary of State will pay heed to the views of the Public Accounts Committee, the professional associations and the local government associations and will not retain this egotistical power to create his own creature which can sweep the land looking at local authorities and getting its own way because of the statutory power that this Bill gives to it.
This is a most devastating Bill. Of the 31 clauses, not to mention the four schedules which themselves cover 10 pages, there is not one clause, not even a subsection, which is not opposed by someone, each one normally being opposed by everyone.
As my right hon. Friend the Member for Ardwick said at the outset of the debate, we shall fight this Bill not only clause by clause but line by line and word by word—whether on the Floor of the House, as I hope that it will be since it is a constitutional matter, or in Standing Committee. Only the present Secretary of State for the Environment would have the arrogance to believe that a Bill of this nature could possibly receive Royal Assent by the date on which its major proposals are designed to come into effect—All Fools' Day 1982.

The Minister for Local Government and Environmental Services (Mr. Tom King): As the House knows, the Bill is divided into three parts. It may help hon. Members if I deal with a number of specific points at the outset.
My hon. Friend the Member for Reading, North (Mr. Durant) referred to water authorities. As my right hon. Friend the Secretary of State made clear in opening the debate, we feel that their position is more akin to that of nationalised industries. As the hon. Member for Islington, South and Finsbury (Mr. Cunningham) said, the Bill will have the effect of removing the power of objection from individual ratepayers, but it will bring the water authorities into line with nationalised industries in that they are subject to the Monopolies and Mergers Commission, their auditors will be appointed by the Secretary of State and there will be answerability to the House and its Select Committees on their behaviour. I am sure that with the energy that the hon. Gentleman's constituents have shown in this matter they will find adequate ways of continuing to monitor the water authority in their area.
The hon. Member for Greenwich (Mr. Barnett), in referring to comparisons of GREs, spoke only of standards

of service. He will know that, like the previous needs assessment, the size of the client groups also influences the overall GRE per head—a point that he perhaps did not take fully into account in his contribution.
The hon. Member for Woolwich, East (Mr. Cartwright), who referred to mandarin groups determining GREs for particular areas, is perhaps not familiar with the complex network of grant working groups and expenditure sub-groups, comprising considerable numbers of local authority representatives, who combine together throughout the year in the work that forms the basis for the GRE assessment for the various authorities.
The hon. Member for Goole (Dr. Marshall) referred to the problems of the drainage rate. He and I have corresponded on this and I am aware of the problem. I do not conceal from the House the fact that it raises difficulties. I am willing to look at the matter again, although I should make clear that I do so without commitment. Nevertheless, I shall genuinely look at it again, as he raised a perfectly fair point today, as he has done on previous occasions.
My hon. Friend the Member for Buckingham (Mr. Benyon) referred to the arbitrary power, as he saw it, of the Secretary of State in a number of these matters. I make once again the point that I have made before to my hon. Friend and to the House in this connection. Any decisions made by my right hon. Friend, and any determinations that he wishes to make, are subject to the approval of the House. That safeguard exists at all times in any of the proposals that we make in this respect.
I stand by the statement that I made on an earlier occasion, which has been quoted by a number of hon. Members. It remains the case that, while the Government still have a responsibility for the distribution of grant, the levels of rates are the responsibility of the the local authorities. They have to determine them and remain answerable to their electorate.
The hon. Member for Preston, South (Mr. Thorne) found difficulty in finding any evidence of overspending by local authorities. However, the latest figure that I have is £1,300 million for the current year. If the hon. Gentleman fails to regard that as a signififcant level of overspending, I am not sure what he would regard as a serious level.
My hon. Friend the Member for Peterborough (Dr. Mawhinney) made it clear that it is against that background that the Government have been forced to act. The Labour Government, faced with a similar problem, were also forced to act, although they now prefer not to draw the attention of the House to that too frequently.
My hon. Friend the Member for Uxbridge (Mr. Shersby) spoke of the qualified privilege of auditors. My understanding is that that already exists for auditors in their work, and it will continue to do so both for district auditors and for approved auditors.

Mr. McWilliam: rose—

Mr. King: If the hon. Gentleman will forgive me, I am trying to cover a number of detailed points which I know hon. Members will wish me to cover.

Mr. McWilliam: rose—

Mr. King: The hon. Gentleman is putting me in a difficult position.
The hon. Member for Isle of Wight (Mr. Ross) asked about lowering the GRE. There is no error in the GREs.


What we are seeking to do is to use the very latest information, including information on capital allocations, that affect loan charges for local authorities in their GREs. We will incorporate that as well to avoid one of the problems experienced this year, when there was a substantial adjustment in the GREs to take account of capital allocation. Those figures will be available this week and the effect will be about minus £56,000 for the Isle of Wight—that is an estimation. The hon. Gentleman may look as if the world has come to an end for him, but it is 0·15 per cent. of the authority's GRE, which is not a substantial change. That information will be available shortly.
I understand the point raised by the hon. Member for Caernarvon (Mr. Wigley) about costs for disasters and special emergencies. As he correctly stated, the Government have made it clear that, as with the policy followed by the previous Government, for emergency expenditure over the product of the penny rate the Government will be prepared to pay 75 per cent. of the extra cost. That was the formula adopted by the previous Government, which we feel is helpful, and we intend to make clear the ways in which it will be covered in respect of block grant and any penalties so that it will be possible to meet councils' points on that. In the past, emergency expenditure has been coped with without any need for a supplementary rate and I hope that it will be possible to continue to do so in the future. The authority should expect to cope with emergencies in the normal way.
My hon. Friend the Member for Peterborough put clearly to the House the background of the Bill. The Government face a challenge to the traditional voluntary relationship between central and local government which has always been observed by local authorities and councils of all political denominations. Certain local authorities are no longer prepared to respect the traditional relationship in which the Government set overall expenditure levels and local government, as a whole, seek to achieve those objectives.
Against that background of a serious level of overspend, with the problems that it causes not only for Government and public expenditure targets but, as we all know, for a considerable number of ratepayers, the Government decided that it was necessary to act.
I am grateful for the support that I have received in respect of part I. My hon. Friends the Members for Carlton (Mr. Holland), for Devizes (Mr. Morrison), for Hornchurch (Mr. Squire), for Peterborough, for Uxbridge and for Reading, North all supported our proposal to ban supplementary rates. Whatever views are taken about supplementary rates, there is no doubt that in the past year they have caused considerable distress to individual ratepayers, particularly the elderly and pensioners faced with an unexpected bill. They have also posed particular problems for many sections of industry, which budgeted their costs and were faced with a serious extra burden. I therefore make no apology to the House for our proposals to ban supplementary rates.

Mr. Guy Barnett: I am grateful to the right hon. Gentleman for giving way. I ask this question quite seriously. Has he or his right hon. Friend made a serious attempt to obtain the co-operation of the so-called overspenders in the way in which the previous Government did and obtained it? Have they seriously

attempted by negotiation through the consultative council and with individual local authorities to gain the kind of co-operation that he says they are seeking?

Mr. King: I assure the hon. Gentleman that we did precisely that. Faced with problems over the levels of local government expenditure, we invited the local authority associations to put forward their own proposals on how the situation could be met. I understand their problems, but I must tell the House that they were unable to advance any alternative proposals to the ones that we have put forward. They told us that quite frankly. If the hon. Gentleman wishes to check what I have said, he will find that that is so.
The difference between the present situation and the one faced by the hon. Member for Greenwich as a Minister in the previous Government is that on that occasion local authorities of an opposite political persuasion—Conservative authorities—recognised their responsibilities and co-operated in the national interest. Now authorities of a different persuasion from the Government are not prepared to recognise the national interest.
Part II of the Bill has commanded a slightly less enthusiastic response in certain quarters of the House. We put forward this proposal because the alternative is to do what the previous Government did. If there was a need to hold back grant, just as they did in 1976, it was done across the board so that all paid equally. As a result, the most prudent paid as much as the most extravagant. We are not prepared to tolerate such a situation. The only way in which we can protect the prudent is by the use of multipliers contained in the Bill.
I am well aware of the concerns of my hon. Friends over a mid-year adjustment of the grant. This raises serious issues, which were referred to by my hon. Friends the Members for Reading, North, for Devizes and for Uxbridge. I understand the difficulty. The matter has also been raised with us by the Association of County Councils and individual local authorities. I cannot give any commitment tonight, but my hon. Friends have put their arguments forcefully, and we shall look at them carefully.
The right hon. Member for Manchester, Ardwick (Mr. Kaufman) referred to the problem of retrospection. We announced this proposal in January 1981. Considerable consultations have been held since then, and a number of exemptions have been made. Obviously, nothing will be effected unless the House gives approval.
I now turn to part III. Contrary to what the right hon. Gentleman said, there is much wider support for this proposal than he suggested. The Layfield report made clear its belief in the need for an independent organisation responsible for local government audit. The advisory committee on local government audit—appointed by the Secretary of State for the Environment in the previous Government, and which we have not changed—also recommended it. It is the system that is applicable in Scotland and the system that the right hon. Gentleman's Government brought into effect in 1975 when they came into power and which they now find extremely offensive. We believe that it will combine the strengths of the district audit and the private sector accountants and make a more effective organisation for local government audit.
My hon. Friend the Member for Carlton expressed concern about what he thought was an unfortunate form of quango. He was kind enough to pay tribute to my right


hon. Friend's record in what he referred to as "quango hunting". Our score at the moment is 64 to five, which is a fairly convincing win. We understand his concern, but I know that he does not carry his campaign to the extent of saying that on no occasion should such an organisation ever be set up if we believe that it is manifestly the right organisation. He is concerned about the growth of such bodies. We have made clear our support for his views by the action that we have taken in severely curtailing the number of organisations involved with our Department. We believe that this is the right body. We do not believe that a new body, separate from Government, composed exclusively of chartered accountants or professional bodies would be right.
The powers of direction and the position in Scotland, to which the right hon. Member for Manchester, Ardwick (Mr. Kaufman) took exception, is the system that his Government put into effect in Scotland. In our view, it has no great handicap. The importance that the Audit Commission will attach to greater value for money is probably the most important single ingredient in the Bill. My hon. Friend the Member for Liverpool, Wavertree (Mr. Steen) referred to that and my hon. Friend the Member for Reading, North drew attention to the scope for economies that exists within local government. Contrary to what the hon. Member for Isle of Wight said, there is no doubt that LAMSAC, which has done much good work, has not had the impact that one would wish to see more widely in local government. We hope very much that the Audit Commission will have such an effect.
The hon. Member for Blaydon (Mr. McWilliam) and the right hon. Member for Widnes (Mr. Oakes) were concerned that it would be the responsibility of the district auditor to look into economy, efficiency and effectiveness. We believe that they are important in local government. It is not a matter of determining the policies. The sentence should be read as a whole:
economy, efficiency and effectiveness … in the carrying out of its policies".
The Bill does not put the district auditor into the position of determining the policy. It determines the economy, efficiency and effectiveness of carrying out that policy.
In my judgment, the hon. Member for Woolwich, East, for a member of the SDP, came perilously close to making a policy statement. It was immediately picked up and welcomed, rather graciously, by my hon. Friend the Member for Peterborough only, unfortunately, for him to be accused of misrepresentation by the hon. Gentleman. He appeared to be paying tribute to the previous rate grant system, and he was singular in that respect.
The right hon. Member for Ardwick made his typical speech. He started with a point of order and then announced that he was going to call for a Committee of the whole House. He made an amusing speech. I enjoyed it more than I should have done, because he dealt flippantly with serious issues. His main charge was an outrageous accusation that the Bill was prompted by the moneylenders of the City of London because we were making borrowing a first charge on the revenue of the authority. We took that provision specifically from the Local Government (Scotland) Act 1975, an Act of the right hon. Gentleman's Administration.
We believe that this measure, which is an interim measure in advance of our proposals for rating reform, as

highlighted and foreshadowed in the Green Paper, is important and should command the support of the whole House.

Question put, That the Bill be now read a Second time:—

The House divided: Ayes 298, Noes 255.

Division No.37]
[10 pm


AYES


Adley, Robert
Dykes, Hugh


Aitken, Jonathan
Eden, Rt Hon Sir John


Alexander, Richard
Edwards, Rt Hon N. (P'broke)


Alison, Rt Hon Michael
Eggar, Tim


Amery, Rt Hon Julian
Elliott, Sir William


Ancram, Michael
Emery, Sir Peter


Arnold, Tom
Eyre, Reginald


Aspinwall, Jack
Fairbairn, Nicholas


Atkins, Rt Hon H. (S'thorne)
Fairgrieve, Sir Russell


Atkins, Robert(Preston N)
Faith, Mrs Sheila


Atkinson, David(B'm'th, E)
Farr, John


Baker, Nicholas(N Dorset)
Fell, Sir Anthony


Bell, Sir Ronald
Fenner, Mrs Peggy


Bendall, Vivian
Finsberg, Geoffrey


Benyon, Thomas(A'don)
Fisher, Sir Nigel


Best, Keith
Fletcher, A.(Ed'nb'gh N)


Bevan, David Gilroy
Fletcher-Cooke, Sir Charles


Biffen, Rt Hon John
Fookes, Miss Janet


Biggs-Davison, Sir John
Forman, Nigel


Blackburn, John
Fowler, Rt Hon Norman


Blaker, Peter
Fox, Marcus


Body, Richard
Fraser, Peter (South Angus)


Bonsor, Sir Nicholas
Fry, Peter


Bottomley, Peter (W'wich W)
Gardner, Edward (S Fylde)


Bowden, Andrew
Garel-Jones, Tristan


Boyson, Dr Rhodes
Glyn, Dr Alan


Braine, Sir Bernard
Goodhart, Sir Philip


Bright, Graham
Goodhew, Sir Victor


Brinton, Tim
Goodlad, Alastair


Britten, Rt. Hon. Leon
Gorst, John


Brooke, Hon Peter
Gow, Ian


Brotherton, Michael
Grant, Anthony (Harrow C)


Brown, Michael(Brigg&amp;Sc'n)
Gray, Hamish


Browne, John(Winchester)
Greenway, Harry


Bruce-Gardyne, John
Grieve, Percy


Bryan, Sir Paul
Griffiths, E.(B'ySt. Edm'ds)


Buck, Antony
Griffiths, Peter Portsm'th N)


Budgen, Nick
Grist, Ian


Bulmer, Esmond
Grylls, Michael


Burden, Sir Frederick
Gummer, John Selwyn


Butcher, John
Hamilton, Hon A.


Butler, Hon Adam
Hamilton, Michael(Salisbury)


Cadbury, Jocelyn
Hampson, Dr Keith


Carlisle, John (Luton West)
Hannam, John


Carlisle, Kenneth (Lincoln)
Haselhurst, Alan


Carlisle, Rt Hon M. (R'c'n)
Hastings, Stephen


Chalker, Mrs. Lynda
Havers, Rt Hon Sir Michael


Channon, Rt. Hon. Paul
Hawkins, Paul


Chapman, Sydney
Hawksley, Warren


Churchill, W.S.
Hayhoe, Barney


Clark, Hon A. (Plym'th, S'n)
Heath, Rt Hon Edward


Clarke, Kenneth(Rushcliffe)
Heddle, John


Clegg, Sir Walter
Henderson, Barry


Cockeram, Eric
Heseltine, Rt Hon Michael


Colvin, Michael
Hicks, Robert


Cope, John
Higgins, Rt Hon Terence L.


Cormack, Patrick
Hill, James


Corrie, John
Hogg, Hon Douglas(Gr'th'm)


Costain, Sir Albert
Hooson, Tom


Cranborne, Viscount
Hordern, Peter


Critchley, Julian
Howe, Rt Hon Sir Geoffrey


Crouch, David
Howell, Rt Hon D. (G'ldf'd)


Dean, Paul (North Somerset)
Howell, Ralph (N Norfolk)


Dickens, Geoffrey
Hunt, David (Wirral)


Dorrell, Stephen
Irving, Charles(Cheltenham)


Douglas-Hamilton, Lord J.
Jenkin, Rt Hon Patrick


Dover, Denshore
Jessel, Toby


du Cann, Rt Hon Edward
Johnson Smith, Geoffrey


Dunn, Robert(Dartford)
Jopling, Rt Hon Michael


Durant, Tony
Joseph, Rt Hon Sir Keith






Kaberry, Sir Donald
Prentice, Rt Hon Reg


Kershaw, Sir Anthony
Price, Sir David (Eastleigh)


Kimball, Sir Marcus
Proctor, K. Harvey


King, Rt Hon Tom
Pym, Rt Hon Francis


Knox, David
Raison, Rt. Hon. Timothy


Lamont, Norman
Rathbone, Tim


Lang, Ian
Rees, Peter (Dover and Deal)


Langford-Holt, Sir John
Rhodes James, Robert


Lawrence, Ivan
Ridley, Hon Nicholas


Lawson, Rt Hon Nigel
Ridsdale, Sir Julian


Lee, John
Rifkind, Malcolm


Le Marchant, Spencer
Roberts, M. (Cardiff NW)


Lennox-Boyd, Hon Mark
Roberts, Wyn (Conway)


Lester, Jim (Beeston)
Rossi, Hugh


Lewis, Kenneth (Rutland)
Rost, Peter


Lloyd, Ian (Havant &amp; W'loo)
Royle, Sir Anthony


Lloyd, Peter (Fareham)
Sainsbury, Hon Timothy


Loveridge, John
St. John-Stevas, Rt Hon N.


Lyell, Nicholas
Scott, Nicholas


McCrindle, Robert
Shaw, Giles (Pudsey)


Macfarlane, Neil
Shaw, Michael(Scarborough)


MacKay, John (Argyll)
Shelton, William(Streatham)


Macmillan, Rt Hon M.
Shepherd, Colin(Hereford)


McNair-Wilson, M. (N'bury)
Shepherd, Richard


McNair-Wilson, P. (New F'st)
Shersby, Michael


McQuarrie, Albert
Silvester, Fred


Madel, David
Sims, Roger


Major, John
Skeet, T. H. H.


Marland, Paul
Smith, Dudley


Marlow, Antony
Speed, Keith


Marshall, Michael (Arundel)
Speller, Tony


Marten, Rt Hon Neil
Spence, John


Mates, Michael
Spicer, Michael(S Worcs)


Maude, Rt Hon Sir Angus
Sproat, Iain


Mawby, Ray
Squire, Robin


Mawhinney, Dr Brian
Stainton, Keith


Maxwell-Hyslop, Robin
Stanbrook, Ivor


Mayhew, Patrick
Stanley, John


Mellor, David
Steen, Anthony


Meyer, Sir Anthony
Stevens, Martin


Miller, Hal (B'grove)
Stewart, A. (E Renfrewshire)


Mills, Iain (Meriden)
Stewart, Ian (Hitchin)


Mills, Peter (West Devon)
Stokes, John


Miscampbell, Norman
Stradling Thomas, J.


Mitchell, David (Basingstoke)
Taylor, Teddy (S'end E)


Moate, Roger
Tebbit, Rt Hon Norman


Monro, Sir Hector
Temple-Morris, Peter


Montgomery, Fergus
Thatcher, Rt Hon Mrs M.


Moore, John
Thompson, Donald


Morgan, Geraint
Thorne, Neil (Ilford South)


Morris, M. (N'hampton S)
Thornton, Malcolm


Morrison, Hon C. (Devizes)
Townend, John (Bridlington)


Morrison, Hon P.(Chester)
Townsend, Cyril D, (B'heath)


Mudd, David
Trippier, David


Murphy, Christopher
Trotter, Neville


Myles, David
van Straubenzee, Sir W.


Neale, Gerrard
Vaughan, Dr Gerard


Needham, Richard
Viggers, Peter


Nelson, Anthony
Waddington, David


Neubert, Michael
Wakeham, John


Newton, Tony
Waldegrave, Hon William


Nott, Rt Hon John
Walker, Rt Hon P. (W'cester)


Onslow, Cranley
Walker-Smith, Rt Hon Sir D.


Oppenheim, Rt Hon Mrs S.
Waller, Gary


Osborn, John
Walters, Dennis


Page, John (Harrow, West)
Ward, John


Page, Richard (SW Herts)
Warren, Kenneth


Parkinson, Rt Hon Cecil
Watson, John


Parris, Matthew
Wells, Bowen


Patten, Christopher (Bath)
Wells, John (Maidstone)


Patten, John (Oxford)
Whitelaw, Rt Hon William


Pattie, Geoffrey
Whitney, Raymond


Pawsey, James
Wickenden, Keith


Percival, Sir Ian
Wiggin, Jerry


Peyton, Rt Hon John
Wilkinson, John


Pink, R. Bonner
Williams, D. (Montgomery)


Pollock, Alexander
Winterton, Nicholas


Porter, Barry
Wolfson, Mark





Young, Sir George (Acton)
Tellers for the Ayes:


Younger, Rt Hon George
Mr. Anthony Berry and



Mr. Carol Mather.




NOES


Abse, Leo
Flannery, Martin


Adams, Allen
Fletcher, Ted (Darlington)


Allaun, Frank
Foot, Rt Hon Michael


Alton, David
Ford, Ben


Anderson, Donald
Forrester, John


Archer, Rt Hon Peter
Foster, Derek


Ashley, Rt Hon Jack
Foulkes, George


Ashton, Joe
Fraser, J. (Lamb'th, N'w'd)


Atkinson, N. (H'gey)
Freeson, Rt Hon Reginald


Barnett, Guy (Greenwich)
Freud, Clement


Beith, A.J.
Garrett, John (Norwich S)


Bennett, Andrew (St'kp't N)
Garrett, W. E. (Wallsend)


Benyon, W. (Buckingham)
George, Bruce


Bidwell, Sydney
Gilbert, Rt Hon Dr John


Booth, Rt Hon Albert
Ginsburg, David


Boothroyd, Miss Betty
Golding, John


Bottomley, Rt Hon A. (M'b'ro)
Graham, Ted


Bradley, Tom
Grant, George (Morpeth)


Bray, Dr Jeremy
Grant, John (Islington C)


Brocklebank-Fowler, C.
Grimond, Rt Hon J.


Brown, Hugh D. (Provan)
Hamilton, James (Bothwell)


Brown, R.C. (N'castle W)
Hamilton, W.W. (C'tral Fife)


Brown, Ronald W. (H'ckn'y S)
Harrison, Rt Hon Walter


Brown, Ron (E'burgh, Leith)
Hattersley, Rt Hon Roy


Buchan, Norman
Haynes, Frank


Callaghan, Rt Hon J.
Healey, Rt Hon Denis


Callaghan, Jim (Midd't'n &amp; P)
Heffer, Eric S.


Campbell, Ian
Hogg, N. (E Dunb't'nshire)


Campbell-Savours, Dale
Holland, S. (L'b'th, Vauxh'll)


Canavan, Dennis
Home Robertson, John


Cant, R. B.
Homewood, William


Carmichael, Neil
Hooley, Frank


Carter-Jones, Lewis
Horam, John


Cartwright, John
Howell, Rt Hon D.


Cocks, Rt Hon M. (B'stol S)
Howells, Geraint


Cohen, Stanley
Hoyle, Douglas


Coleman, Donald
Huckfield, Les


Conlan, Bernard
Hughes, Mark (Durham)


Cowans, Harry
Hughes, Robert (Aberdeen N)


Cox, T. (W'dsw'th, Toot'g)
Hughes, Roy (Newport)


Craigen, J.M. (G'gow, M'hill)
Janner, Hon Greville


Crawshaw, Richard
Jay, Rt Hon Douglas


Crowther, Stan
John, Brynmor


Cunliffe, Lawrence
Johnson, James (Hull West)


Cunningham, G. (Islington S)
Johnson, Walter (Derby S)


Cunningham, Dr J. (W'h'n)
Johnston, Russell (Inverness)


Dalyell, Tam
Jones, Rt Hon Alec (Rh'dda)


Davidson, Arthur
Jones, Barry (East Flint)


Davies, Rt Hon Denzil (L'lli)
Jones, Dan (Burnley)


Davies, Ifor (Gower)
Kaufman, Rt Hon Gerald


Davis, Clinton (Hackney C)
Kerr, Russell


Davis, T. (B'ham, Stechf'd)
Kilroy-Silk, Robert


Deakins, Eric
Kinnock, Neil


Dean, Joseph (Leeds West)
Lambie, David


Dewar, Donald
Lamborn, Harry


Dixon, Donald
Lamond, James


Dobson, Frank
Leadbitter, Ted


Dormand, Jack
Lewis, Arthur (N'ham NW)


Douglas, Dick
Lewis, Ron (Carlisle)


Douglas-Mann, Bruce
Litherland, Robert


Dunlop, John
Lofthouse, Geoffrey


Dunnett, Jack
Lyons, Edward (Bradf'd W)


Dunwoody, Hon Mrs G.
Mabon, Rt Hon Dr J. Dickson


Eadie, Alex
McCartney, Hugh


Eastham, Ken
McDonald, Dr Oonagh


Edwards, R. (W'hampt'n S E)
McElhone, Frank


Ellis, R. (NED'bysh're)
McKay, Allen (Penistone)


Ellis, Tom (Wrexham)
McKelvey, William


English, Michael
MacKenzie, Rt Hon Gregor


Ennals, Rt Hon David
Maclennan, Robert


Evans, Ioan (Aberdare)
McMahon, Andrew


Evans, John (Newton)
McNally, Thomas


Faulds, Andrew
McNamara, Kevin


Field, Frank
McTaggart, Robert


Fitch, Alan
McWilliam, John






Magee, Bryan
Sheerman, Barry


Marshall, D (G'gowS'ton)
Sheldon, Rt Hon R.


Marshall, DrEdmund (Goole)
Shore, Rt Hon Peter


Marshall, Jim (LeicesterS)
Short, MrsRenee


Martin, M (G'gowS'burn)
Silkin, Rt Hon J. (Deptford)


Mason, Rt Hon Roy
Silkin, Rt Hon S. C. (Dulwich)


Maxton, John
Silverman, Julius


Maynard, MissJoan
Skinner, Dennis


Meacher, Michael
Smith, Rt Hon J. (N Lanark)


Mellish, Rt Hon Robert
Snape, Peter


Mikardo, Ian
Soley, Clive


Millan, Rt Hon Bruce
Spearing, Nigel


Miller, Dr M. S. (E Kilbride)
Spriggs, Leslie


Mitchell, Austin (Grimsby)
Stallard, A.W.


Mitchell, R.C. (Soton Itchen)
Steel, Rt Hon David


Morris, Rt Hon A. (W'shawe)
Stoddart, David


Morris, Rt Hon C. (O'shaw)
Stott, Roger


Moyle, Rt Hon Roland
Strang, Gavin


Mulley, Rt Hon Frederick
Straw, Jack


Newens, Stanley
Summerskill, HonDrShirley


Oakes, Rt Hon Gordon
Taylor, Mrs Ann (Bolton W)


Ogden, Eric
Thomas, Dafydd (Merioneth)


O'Halloran, Michael
Thomas, Jeffrey (Abertillery)


O'Neill, Martin
Thomas, Mike (Newcastle E)


Orme, Rt Hon Stanley
Thomas, Dr R. (Carmarthen)


Owen, Rt Hon Dr David
Thorne, Stan (Preston South)


Palmer, Arthur
Tilley, John


Park, George
Tinn, James


Parker, John
Torney, Tom


Pavitt, Laurie
Varley, Rt Hon Eric G.


Pendry, Tom
Wainwright, E. (Dearne V)


Penhaligon, David
Wainwright, R. (Colne V)


Pitt, William Henry
Walker, Rt Hon H.  (D'caster)


Powell, Raymond (Ogmore)
Watkins, David


Prescott, John
Wellbeloved, James


Price, C. (Lewisham W)
Welsh, Michael


Race, Reg
White, Frank R.


Radice, Giles
White, J. (G'gow Pollok)


Rees, Rt Hon M (Leeds S)
Whitehead, Phillip


Richardson, Jo
Whitlock, William


Roberts, Albert (Normanton)
Wigley, Dafydd


Roberts, Allan(Bootle)
Willey, Rt Hon Frederick


Roberts, Ernest (HackneyN)
Williams, Rt Hon A. (S'sea W)


Roberts, Gwilym (Cannock)
Williams, Rt Hon Mrs (Crosby)


Robertson, George
Wilson, Rt Hon Sir H. (H'ton)


Robinson, G. (Coventry NW)
Winnick, David


Rodgers, Rt Hon William
Woodall, Alec


Rooker, J.W.
Woolmer, Kenneth


Roper, John
Wrigglesworth, Ian


Ross, Ernest (Dundee West)
Wright, Sheila


Ross, Stephen (Isle of Wight)



Rowlands, Ted
Tellers for the Noes:


Ryman, John
Mr. Ron Leighton and


Sandelson, Neville
Mr. George Morton.


Sever, John

Question accordingly agreed to.

Motion made, and Question put, That the Bill be committed to a Committee of the whole House.—[Mr. Michael Cocks.]

The House divided: Ayes 251, Noes 297.

Division No. 38]
[10.15 pm


AYES


Abse, Leo
Booth, Rt Hon Albert


Adams, Allen
Boothroyd, Miss Betty


Allaun, Frank
Bottomley, Rt Hon A. (M'b'ro)


Alton, David
Bradley, Tom


Anderson, Donald
Bray, Dr Jeremy


Archer, Rt Hon Peter
Brocklebank-Fowler, C.


Ashley, Rt Hon Jack
Brown, Hugh D. (Provan)


Ashton, Joe
Brown, R.C. (N'castle W)


Atkinson, N. (H'gey)
Brown, Ronald W. (H'ckn'y S)


Barnett, Guy (Greenwich)
Brown, Ron (E'burgh, Leith)


Berth, A.J.
Buchan, Norman


Bennett, Andrew(St'kp't N)
Callaghan, Rt Hon J.


Bidwell, Sydney
Callaghan, Jim (Midd't'n &amp;P)





Campbell, Ian
Howells, Geraint


Campbell-Savours, Dale
Hoyle, Douglas


Canavan, Dennis
Huckfield, Les


Cant, R. B.
Hughes, Mark (Durham)


Carmichael, Neil
Hughes, Robert (Aberdeen N)


Carter-Jones, Lewis
Hughes, Roy (Newport)


Cartwright, John
Janner, Hon Greville


Cocks, Rt Hon M. (B'stol S)
Jay, Rt Hon Douglas


Cohen, Stanley
John, Brynmor


Coleman, Donald
Johnson, James (Hull West)


Conlan, Bernard
Johnson, Walter (Derby S)


Cowans, Harry
Johnston, Russell (Inverness)


Cox, T. (W'dsw'th, Toot'g)
Jones, Rt Hon Alec (Rh'dda)


Craigen, J.M. (G'gow, M'hill)
Jones, Barry (East Flint)


Crawshaw, Richard
Jones, Dan (Burnley)


Crowther, Stan
Kaufman, Rt Hon Gerald


Cunliffe, Lawrence
Kerr, Russell


Cunningham, Dr J. (W'h'n)
Kilroy-Silk, Robert


Dalyell, Tam
Kinnock, Neil


Davidson, Arthur
Lambie, David


Davies, Rt Hon Denzil (L'lli)
Lamborn, Harry


Davies, Ifor (Gower)
Lamond, James


Davis, Clinton (Hackney C)
Leadbitter, Ted


Davis, T. (B'ham, Stechf'd)
Lewis, Arthur (N'ham NW)


Deakins, Eric
Lewis, Ron (Carlisle)


Dean, Joseph (Leeds West)
Litherland, Robert


Dewar, Donald
Lofthouse, Geoffrey


Dixon, Donald
Lyons, Edward (Bradf'd W)


Dobson, Frank
Mabon, Rt Hon Dr J. Dickson


Dormand, Jack
McCartney, Hugh


Douglas, Dick
McDonald, DrOonagh


Douglas-Mann, Bruce
McElhone, Frank


Dunlop, John
McKay, Allen (Penistone)


Dunnett, Jack
McKelvey, William


Dunwoody, Hon Mrs G.
MacKenzie, Rt Hon Gregor


Eadie, Alex
Maclennan, Robert


Eastham, Ken
McMahon, Andrew


Edwards, R. (W'hampt'n S E)
McNally, Thomas


Ellis, R. (NED'bysh're)
McNamara, Kevin


Ellis, Tom (Wrexham)
McTaggart, Robert


English, Michael
McWilliam, John


Ennals, Rt Hon David
Magee, Bryan


Evans, loan (Aberdare)
Marshall, D (G'gowS'ton)


Evans, John (Newton)
Marshall, Dr Edmund (Goole)


Faulds, Andrew
Marshall, Jim (Leicester S)


Field, Frank
Martin, M (G'gowS'burn)


Fitch, Alan
Mason, Rt Hon Roy


Flannery, Martin
Maxton, John


Fletcher, Ted (Darlington)
Maynard, Miss Joan


Foot, Rt Hon Michael
Meacher, Michael


Ford, Ben
Mellish, Rt Hon Robert


Forrester, John
Mikardo, Ian


Foster, Derek
Millan, Rt Hon Bruce


Foulkes, George
Miller, Dr M.S. (E Kilbride)


Fraser, J. (Lamb'th, N'w'd)
Mitchell, Austin (Grimsby)


Freeson, Rt Hon Reginald
Mitchell, R.C. (Soton Itchen)


Freud, Clement
Morris, Rt Hon A. (W'shawe)


Garrett, John (Norwich S)
Morris, Rt Hon C. (O'shaw)


Garrett, W.E. (Wallsend)
Moyle, Rt Hon Roland


George, Bruce
Mulley, Rt Hon Frederick


Gilbert, Rt Hon Dr John
Newens, Stanley


Ginsburg, David
Oakes, Rt Hon Gordon


Golding, John
Ogden, Eric


Graham, Ted
O'Halloran, Michael


Grant, George (Morpeth)
O'Neill, Martin


Grant, John (Islington C)
Orme, Rt Hon Stanley


Grimond, Rt Hon J.
Owen, Rt Hon Dr David


Hamilton, James (Bothwell)
Palmer, Arthur


Hamilton, W.W. (C'tral Fife)
Park, George


Harrison, Rt Hon Walter
Parker, John


Hattersley, Rt Hon Roy
Pavitt, Laurie


Haynes, Frank
Pendry, Tom


Healey, Rt Hon Denis
Penhaligon, David


Heffer, Eric S.
Pitt, William Henry


Hogg, N. (E Dunb't'nshire)
Powell, Raymond (Ogmore)


Holland, S. (L'b'th, Vauxh'll)
Prescott, John


Home Robertson, John
Price, C. (Lewisham W)


Homewood, William
Race, Reg


Hooley, Frank
Radice, Giles


Horam, John
Rees, Rt Hon M (Leeds S)






Richardson, Jo
Summerskill, Hon Dr Shirley


Roberts, Albert (Normanton)
Taylor, Mrs Ann (Bolton W)


Roberts, Allan (Bootle)
Thomas, Dafydd (Merioneth)


Roberts, Ernest (Hackney N)
Thomas, Jeffrey (Abertillery)


Roberts, Gwilym (Cannock)
Thomas, Mike (Newcastle E)


Robertson, George
Thomas, Dr R. (Carmarthen)


Robinson, G. (Coventry NW)
Thorne, Stan (Preston South)


Rodgers, Rt Hon William
Tilley, John


Rooker, J. W.
Tinn, James


Roper, John
Torney, Tom


Ross, Ernest (Dundee West)
Varley, Rt Hon Eric G.


Ross, Stephen (Isle of Wight)
Wainwright, E. (Dearne V)


Rowlands, Ted
Wainwright, R. (Colne V)


Ryman, John
Walker, Rt Hon H. (D' caster)


Sandelson, Neville
Watkins, David


Sever, John
Wellbeloved, James


Sheerman, Barry
Welsh, Michael


Sheldon, Rt Hon R.
White, Frank R.


Shore, Rt Hon Peter
White, J. (G'gow Pollok)


Short, Mrs Renee
Whitehead, Phillip


Silkin, Rt Hon J. (Deptford)
Whitlock, William


Silkin, Rt Hon S. C. (Dulwich)
Wigley, Dafydd


Silverman, Julius
Willey, Rt Hon Frederick


Skinner, Dennis
Williams, Rt Hon A. (S'sea W)


Smith, Rt Hon J. (N Lanark)
Williams, Rt Hon Mrs (Crosby)


Snape, Peter
Wilson, Rt Hon Sir H. (H'ton)


Soley, Clive
Winnick, David


Spearing, Nigel
Woodall, Alec


Spriggs, Leslie
Woolmer, Kenneth


Stallard, A. W.
Wrigglesworth, Ian


Steel, Rt Hon David
Wright, Sheila


Stoddart, David



Stott, Roger
Tellers for the Ayes:


Strang, Gavin
Mr. Ron Leighton and


Straw, Jack
Mr. George Morton.




NOES


Adley, Robert
Carlisle, John (Luton West)


Aitken, Jonathan
 Carl isle, Kenneth (Lincoln)


Alexander, Richard
Carlisle, Rt Hon M. (R'c'n)


Alison, Rt Hon Michael
Chalker, Mrs. Lynda


Amery, Rt Hon Julian
Channon, Rt. Hon. Paul


Ancram, Michael
Chapman, Sydney


Arnold, Tom
Churchill, W.S.


Aspinwall, Jack
Clark, Hon A. (Plym'th, S'n)


Atkins, Rt Hon H. (S'thorne)
Clarke, Kenneth (Rushcliffe)


Atkins, Robert (Preston N)
Clegg, Sir Walter


Atkinson, David (B'm'th, E)
Cockeram, Eric


Baker, Nicholas (N Dorset)
Colvin, Michael


Bell, Sir Ronald
Cope, John


Bendall, Vivian
Cormack, Patrick


Benyon, Thomas (A'don)
Corrie, John


Best, Keith
Costain, Sir Albert


Bevan, David Gilroy
Cranborne, Viscount


Biffen, Rt Hon John
Critchley, Julian


Biggs-Davison, Sir John
Crouch, David


Blackburn, John
Dean, Paul (North Somerset)


Blaker, Peter
Dickens, Geoffrey


Body, Richard
Dorrell, Stephen


Bonsor, Sir Nicholas
Douglas-Hamilton, Lord J.


Bottomley, Peter (W'wich W)
Dover, Denshore


Bowden, Andrew
du Cann, Rt Hon Edward


Boyson, Dr Rhodes
Dunn, Robert (Dartford)


Braine, Sir Bernard
Durant, Tony


Bright, Graham
Dykes, Hugh


Brinton, Tim
Eden, Rt Hon Sir John


Brittan, Rt. Hon. Leon
Edwards, Rt Hon N. (P'broke)


Brooke, Hon Peter
Eggar, Tim


Brotherton, Michael
Elliott, SirWilliam


Brown, Michael (Brigg&amp;Sc'n)
Emery, Sir Peter


Browne, John (Winchester)
Eyre, Reginald


Bruce-Gardyne, John
Fairbairn, Nicholas


Bryan, Sir Paul
Fairgrieve, Sir Russell


Buck, Antony
Faith, Mrs Sheila


Budgen, Nick
Farr, john


Bulmer, Esmond
Fell, Sir Anthony


Burden, Sir Frederick
Fenner, Mrs Peggy


Butcher, John
Finsberg, Geoffrey


Butler, Hon Adam
Fisher, Sir Nigel


Cadbury, Jocelyn
Fletcher, A. (Ed'nb'gh N)





Fletcher-Cooke, Sir Charles
McQuarrie, Albert


Fookes, Miss Janet
Madel, David


Forman, Nigel
Major, John


Fowler, Rt Hon Norman
Marland, Paul


Fox, Marcus
Marlow, Antony


Fraser, Peter (South Angus)
Marshall, Michael (Arundel)


Fry, Peter
Marten, Rt Hon Neil


Gardner, Edward (S Fylde)
Mates, Michael


Garel-Jones, Tristan
Maude, Rt Hon Sir Angus


Glyn, Dr Alan
Mawby, Ray


Goodhart, Sir Philip
Mawhinney, Dr Brian


Goodhew, Sir Victor
Maxwell-Hyslop, Robin


Goodlad, Alastair
Mayhew, Patrick


Gorst, John
Mellor, David


Gow, Ian
Meyer, Sir Anthony


Grant, Anthony (Harrow C)
Miller, Hal (B'grove)


Gray, Hamish
Mills, lain (Meriden)


Greenway, Harry
Mills, Peter (West Devon)


Grieve, Percy
Miscampbell, Norman


Griffiths, E. (B'ySt.Edm'ds)
Mitchell, David (Basingstoke)


Griffiths, Peter Portsm'th N)
Moate, Roger


Grist, Ian
Monro, Sir Hector


Grylls, Michael
Montgomery, Fergus


Glimmer, John Selwyn
Moore, John


Hamilton, Hon A.
Morgan, Geraint


Hamilton, Michael (Salisbury)
Morris, M. (N'hampton S)


Hampson, Dr Keith
Morrison, Hon C. (Devizes)


Hannam, John
Morrison, Hon P. (Chester)


Haselhurst, Alan
Mudd, David


Hastings, Stephen
Murphy, Christopher


Havers, Rt Hon Sir Michael
Myles, David


Hawkins, Paul
Neale, Gerrard


Hawksley, Warren
Needham, Richard


Hayhoe, Barney
Nelson, Anthony


Heath, Rt Hon Edward
Neubert, Michael


Heddle, John
Newton, Tony


Henderson, Barry
Nott, Rt Hon John


Heseltine, Rt Hon Michael
Onslow, Cranley


Hicks, Robert
Oppenheim, Rt Hon Mrs S.


Higgins, Rt Hon Terence L.
Osborn, John


Hill, James
Page, John (Harrow, West)


Hogg, Hon Douglas (Gr'th'm)
Page, Richard (SW Herts)


Holland, Philip (Carlton)
Parkinson, Rt Hon Cecil


Hooson, Tom
Parris, Matthew


Hordern, Peter
Patten, Christopher (Bath)


Howe, Rt Hon Sir Geoffrey
Patten, John (Oxford)


Howell, Rt Hon D. (G'ldf'd)
Pattie, Geoffrey


Howell, Ralph (N Norfolk)
Pawsey, James


Hunt, David (Wirral)
Peyton, Rt Hon John


Irving, Charles (Cheltenham)
Pink, R. Bonner


Jenkin, Rt Hon Patrick
Pollock, Alexander


Jessel, Toby
Porter, Barry


Johnson Smith, Geoffrey
Prentice, Rt Hon Reg


Jopling, Rt Hon Michael
Price, Sir David (Eastleigh)


Joseph, Rt Hon Sir Keith
Proctor, K. Harvey


Kaberry, Sir Donald
Pym, Rt Hon Francis


Kershaw, Sir Anthony
Raison, Rt Hon Timothy


Kimball, Sir Marcus
Rathbone, Tim


King, Rt Hon Tom
Rees, Peter (Dover and Deal)


Knox, David
Rhodes James, Robert


Lamont, Norman
Ridley, Hon Nicholas


Lang, Ian
Ridsdale, Sir Julian


Langford-Holt, Sir John
Rifkind, Malcolm


Lawrence, Ivan
Roberts, M. (Cardiff NW)


Lawson, Rt Hon Nigel
Roberts, Wyn (Conway)


Lee, John
Rossi, Hugh


LeMarchant, Spencer
Rost, Peter


Lennox-Boyd, Hon Mark
Royle, Sir Anthony


Lester, Jim (Beeston)
Sainsbury, Hon Timothy


Lewis, Kenneth(Rutland)
St. John-Stevas, Rt Hon N.


Lloyd, Ian (Havant &amp; W'loo)
Shaw, Giles (Pudsey)


Lloyd, Peter (Fareham)
Shaw, Michael (Scarborough)


Loveridge, John
Shelton, William (Streatham)


Lyell, Nicholas
Shepherd, Colin (Hereford)


McCrindle, Robert
Shepherd, Richard


Macfarlane, Neil
Shersby, Michael


MacKay, John (Argyll)
Silvester, Fred


Macmillan, Rt Hon M.
Sims, Roger


McNair-Wilson, M. (N'bury)
Skeet, T. H. H.


McNair-Wilson, P. (New F'st)
Smith, Dudley






Speed, Keith
Viggers, Peter


Speller, Tony
Waddington, David


Spence, John
Wakeham, John


Spicer, Michael (S Worcs)
Waldegrave, Hon William


Sproat, lain
Walker, Rt Hon P. (W'cester)


Squire, Robin
Walker-Smith, Rt Hon Sir D.


Stainton, Keith
Waller, Gary


Stanbrook, Ivor
Walters, Dennis


Stanley, John
Ward, John


Steen, Anthony
Warren, Kenneth


Stevens, Martin
Watson, John


Stewart, A. (E Renfrewshire)
Wells, Bowen


Stewart, Ian (Hitchin)
Wells, John (Maidstone)


Stokes, John
Whitelaw, Rt Hon William


Stradling Thomas, J.
Whitney, Raymond


Taylor, Teddy (S'end E)
Wickenden, Keith


Tebbit, Rt Hon Norman
Wiggin, Jerry


Temple-Morris, Peter
Wilkinson, John


Thatcher, Rt Hon Mrs M.
Williams, D. (Montgomery)


Thompson, Donald
Winterton, Nicholas


Thorne, Neil (1IfordSouth)
Wolfson, Mark


Thornton, Malcolm
Young, Sir George (Acton)


Townend, John (Bridlington)
Younger, Rt Hon George


Townsend, Cyril D, (B'heath)



Trippier, David
Tellers for the Noes:


Trotter, Neville
Mr. Anthony Berry and


van Straubenzee, Sir W.
Mr. Carol Mather.


Vaughan, Dr Gerard

Question accordingly negatived.

Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

Orders of the Day — Local Government Finance (No. 2) [Money]

Queen's recommendation having been signified—Motion made and Question proposed
That, for the purposes of any Act of the present Session to abolish supplementary rates and supplementary precepts, to require rates and precepts to be made or issued for complete financial years, to make further provision with respect to the borrowing powers of local authorities, to amend the provisions for relating to adjustments of the distribution of block grant and to make new provision for auditing the accounts of local authorities and other public bodies, it is expedient to authorize—

(a) the payment out of moneys provided by Parliament of any sums required by the Secretary of State for— 

(i) making, during an initial period, payments in respect of the expenses of the Audit Commission established by that Act and for providing it with working capital;
(ii) paying fees to that Commission in respect of services provided for government departments;

(b) payments into and out of the National Loans Fund and the Consolidated Fund in respect of loans by the Secretary of State to that Commission and Treasury guarantees in respect of loans to that Commission by persons other than the Secretary of State; and
(c) any increase in the sums payable out of moneys provided by Parliament under any other Act which is attributable to expenditure by local authorities in respect of borrowing or of services provided by that Commission.—[Mr. Brooke.]

The House divided: Ayes 295, Noes 247.

Division No. 39]
[10.29 pm


AYES


Adley, Robert
Atkinson, David (B'm'th, E)


Aitken, Jonathan
Baker, Nicholas (N Dorset)


Alexander, Richard
Bell, Sir Ronald


Alison, Rt Hon Michael
Bendall, Vivian


Amery, Rt Hon Julian
Benyon, Thomas (A'don)


Ancram, Michael
Best, Keith


Arnold, Tom
Bevan, David Gilroy


Aspinwall, Jack
Biffen, Rt Hon John


Atkins, Rt Hon H. (S'thorne)
Biggs-Davison, Sir John


Atkins, Robert (Preston N)
Blackburn, John



Blaker, Peter



Body, Richard





Bonsor, Sir Nicholas
Gray, Hamish


Bottomley, Peter (W'wich W)
Greenway, Harry


Bowden, Andrew
Grieve, Percy


Boyson, Dr Rhodes
Griffiths, E. (B'ySt. Edm'ds)


Braine, Sir Bernard
Griffiths, Peter Portsm'th N)


Bright, Graham
Grist, Ian


Brinton, Tim
Grylls, Michael


Brittan, Rt. Hon. Leon
Gummer, John Selwyn


Brooke, Hon Peter
Hamilton, Hon A.


Brotherton, Michael
Hamilton, Michael (Salisbury)


Brown, Michael (Brigg&amp;Sc'n)
Hampson, Dr Keith


Browne, John (Winchester)
Hannam, John


Bruce-Gardyne, John
Haselhurst, Alan


Bryan, Sir Paul
Hastings, Stephen


Buck, Antony
Havers, Rt Hon Sir Michael


Budgen, Nick
Hawkins, Paul


Bulmer, Esmond
Hawksley, Warren


Burden, Sir Frederick
Hayhoe, Barney


Butcher, John
Heath, Rt Hon Edward


Butler, Hon Adam
Heddle, John


Cadbury, Jocelyn
Henderson, Barry


Carlisle, John (Luton West)
Heseltine, Rt Hon Michael


Carlisle, Kenneth (Lincoln)
Hicks, Robert


Carlisle, Rt Hon M. (R'c'n)
Higgins, Rt Hon Terence L.


Chalker, Mrs. Lynda
Hill, James


Channon, Rt. Hon. Paul
Hogg, Hon Douglas (Gr'th'm)


Chapman, Sydney
Hooson, Tom


Churchill, W.S.
Hordern, Peter


Clark, Hon A. (Plym'th, S'n)
Howe, Rt Hon Sir Geoffrey


Clarke, Kenneth (Rushcliffe)
Howell, Rt Hon D. (G'ldf'd)


Clegg, Sir Walter
Howell, Ralph (N Norfolk)


Cockeram, Eric
Hunt, David (Wirral)


Colvin, Michael
Irving, Charles (Cheltenham)


Cope, John
Jenkin, Rt Hon Patrick


Cormack, Patrick
Jessel, Toby


Corrie, John
Johnson Smith, Geoffrey


Costain, Sir Albert
Jopling, Rt Hon Michael


Cranborne, Viscount
Joseph, Rt Hon Sir Keith


Critchley, Julian
Kaberry, Sir Donald


Crouch, David
Kershaw, Sir Anthony


Dean, Paul (North Somerset)
Kimball, Sir Marcus


Dickens, Geoffrey
King, Rt Hon Tom


Dorrell, Stephen
Knox, David


Douglas-Hamilton, Lord J.
Lament, Norman


Dover, Denshore
Lang, Ian


du Cann, Rt Hon Edward
Langford-Holt, Sir John


Dunn, Robert (Dartford)
Lawrence, Ivan


Durant, Tony
Lawson, Rt Hon Nigel


Dykes, Hugh
Lee, John


Eden, Rt Hon Sir John
Le Marchant, Spencer


Edwards, Rt Hon N. (P'broke)
Lennox-Boyd, Hon Mark


Eggar, Tim
Lester, Jim (Beeston)


Elliott, Sir William
Lewis, Kenneth (Rutland)


Emery, Peter
Lloyd, Ian (Havant &amp; W'loo)


Eyre, Reginald
Lloyd, Peter (Fareham)


Fairbairn, Nicholas
Loveridge, John


Fairgrieve, Sir Russell
Lyell, Nicholas


Faith, Mrs Sheila
McCrindle, Robert


Farr, John
Macfarlane, Neil


Fell, Anthony
MacKay, John (Argyll)


Fenner, Mrs Peggy
Macmillan, Rt Hon M.


Finsberg, Geoffrey
McNair-Wilson, M. (N'bury)


Fisher, Sir Nigel
McNair-Wilson, P. (New F'st)


Fletcher, A. (Ed'nb'gh N)
McQuarrie, Albert


Fletcher-Cooke, Sir Charles
Madel, David


Fookes, Miss Janet
Major, John


Forman, Nigel
Marland, Paul


Fowler, Rt Hon Norman
Marlow, Antony


Fox, Marcus
Marshall, Michael (Arundel)


Fraser, Peter (South Angus)
Marten, Rt Hon Neil


Fry, Peter
Mates, Michael


Gardner, Edward (S Fylde)
Maude, Rt Hon Sir Angus


Garel-Jones, Tristan
Mawby, Ray


Glyn, Dr Alan
Mawhinney, Dr Brian


Goodhart, Sir Philip
Maxwell-Hyslop, Robin


Goodhew, Victor
Mayhew, Patrick


Goodlad, Alastair
Mellor, David


Gorst, John
Meyer, Sir Anthony


Gow, Ian
Miller, Hal (B'grove)


Grant, Anthony (Harrow C)
Mills, Iain (Meriden)






Mills, Peter (West Devon)
Silvester, Fred


Miscampbell, Norman
Sims, Roger


Mitchell, David (Basingstoke)
Skeet, T. H. H.


Moate, Roger
Smith, Dudley


Monro, Sir Hector
Speed, Keith


Montgomery, Fergus
Speller, Tony


Moore, John
Spence, John


Morgan, Geraint
Spicer, Michael (S Worcs)


Morris, M. (N'hampton S)
Sproat, Iain


Morrison, Hon C. (Devizes)
Squire, Robin


Morrison, Hon P. (Chester)
Stainton, Keith


Mudd, David
Stanbrook, Ivor


Murphy, Christopher
Stanley, John


Myles, David
Steen, Anthony


Neale, Gerrard
Stevens, Martin


Needham, Richard
Stewart, A. (E Renfrewshire)


Nelson, Anthony
Stewart, Ian (Hitchin)


Neubert, Michael
Stokes, John


Newton, Tony
Stradling Thomas, J.


Nott, Rt Hon John
Taylor, Teddy (S'end E)


Onslow, Cranley
Tebbit, Rt Hon Norman


Oppenheim, Rt Hon Mrs S.
Temple-Morris, Peter


Osborn, John
Thatcher, Rt Hon Mrs M.


Page, John (Harrow, West)
Thompson, Donald


Page, Richard (SW Herts)
Thorne, Neil (Ilford South)


Parkinson, Rt Hon Cecil
Thornton, Malcolm


Parris, Matthew
Townend, John (Bridlington)


Patten, Christopher (Bath)
Townsend, Cyril D, (B'heath)


Patten, John (Oxford)
Trippier, David


Pattie, Geoffrey
Trotter, Neville


Pawsey, James
Van Straubenzee, Sir W.


Peyton, Rt Hon John
Vaughan, Dr Gerard


Pink, R. Bonner
Viggers, Peter


Pollock, Alexander
Waddington, David


Porter, Barry
Wakeham, John


Prentice, Rt Hon Reg
Waldegrave, Hon William


Price, Sir David (Eastleigh)
Walker, Rt Hon P. (W'cester)


Proctor, K. Harvey
Waller, Gary


Pym, Rt Hon Francis
Walters, Dennis


Raison, Timothy
Ward, John


Rathbone, Tim
Warren, Kenneth


Rees, Peter (Dover and Deal)
Watson, John


Rhodes James, Robert
Wells, Bowen


Ridley, Hon Nicholas
Wells, John (Maidstone)


Ridsdale, Sir Julian
Whitelaw, Rt Hon William


Rifkind, Malcolm
Whitney, Raymond


Roberts, M. (Cardiff NW)
Wickenden, Keith


Roberts, Wyn (Conway)
Wiggin, Jerry


Rossi, Hugh
Wilkinson, John


Rost, Peter
Williams, D. (Montgomery)


Royle, Sir Anthony
Winterton, Nicholas


Sainsbury, Hon Timothy
Wolfson, Mark


St. John-Stevas, Rt Hon N.
Young, Sir George (Acton)


Shaw, Giles (Pudsey)
Younger, Rt Hon George


Shaw, Michael (Scarborough)



Shelton, William (Streatham)
Tellers for the Ayes:


Shepherd, Colin (Hereford)
Mr. Anthony Berry and


Shepherd, Richard
Mr. Carol Mather.


Shersby, Michael





NOES


Abse, Leo
Brown, Hugh D. (Provan)


Adams, Allen
Brown, R.C. (N'castle W)


Allaun, Frank
Brown, Ronald W. (H'ckn'y S)


Alton, David
Brown, Ron (E'burgh, Leith)


Anderson, Donald
Buchan, Norman


Archer, Rt Hon Peter
Callaghan, Rt Hon J.


Ashley, Rt Hon Jack
Callaghan, Jim (Midd't'n &amp; P)


Ashton, Joe
Campbell, Ian


Atkinson, N. (H'gey)
Campbell-Savours, Dale


Barnett, Guy (Greenwich)
Canavan, Dennis


Beith, A. J.
Cant, R. B.


Bennett, Andrew (St'kp't N)
Carmichael, Neil


Bidwell, Sydney
Carter-Jones, Lewis


Booth, Rt Hon Albert
Cartwright, John


Boothroyd, Miss Betty
Cocks, Rt Hon M. (B'stol S)


Bottomley, Rt Hon A. (M'b'ro)
Cohen, Stanley


Bradley, Tom
Coleman, Donald


Bray, Dr Jeremy
Conlan, Bernard


Brocklebank-Fowler, C.
Cowans, Harry





Cox, T. (W'dsw'th, Toot'g)
Kaufman, Rt Hon Gerald


Craigen, J.M. (G'gow, M'hill)
Kerr, Russell


Crawshaw, Richard
Kilroy-Silk, Robert


Crowther, Stan
Kinnock, Neil


Cunliffe, Lawrence
Lambie, David


Cunningham, Dr J. (W'h'n)
Lamborn, Harry


Dalyell, Tam
Lamond, James


Davidson, Arthur
Leadbitter, Ted


Davies, Rt Hon Denzil (L'lli)
Leighton, Ronald


Davies, Ifor (Gower)
Lewis, Arthur (N'ham NW)


Davis, Clinton (Hackney C)
Lewis, Ron (Carlisle)


Davis, T. (B'ham, Stechf'd)
Litherland, Robert


Deakins, Eric
Lofthouse, Geoffrey


Dean, Joseph (Leeds West)
Lyons, Edward (Bradf'd W)


Dewar, Donald
Mabon, Rt Hon Dr J. Dickson


Dixon, Donald
McCartney, Hugh


Dobson, Frank
McDonald, Dr Oonagh


Dormand, Jack
McElhone, Frank


Douglas, Dick
McKelvey, William


Douglas-Mann, Bruce
MacKenzie, Rt Hon Gregor


Dunlop, John
McMahon, Andrew


Dunnett, Jack
McNally, Thomas


Dunwoody, Hon Mrs G.
McNamara, Kevin


Eadie, Alex
McTaggart, Robert


Eastham, Ken
McWilliam, John


Ellis, R. (NED'bysh're)
Magee, Bryan


Ellis, Tom (Wrexham)
Marshall, D (G'gowS'ton)


English, Michael
Marshall, Dr Edmund (Goole)


Ennals, Rt Hon David
Marshall, Jim (Leicester S)


Evans, Ioan (Aberdare)
Martin, M (G'gowS'burn}


Evans, John (Newton)
Mason, Rt Hon Roy


Faulds, Andrew
Maxton, John


Field, Frank
Maynard, Miss Joan


Fitch, Alan
Meacher, Michael


Flannery, Martin
Mellish, Rt Hon Robert


Fletcher, Ted (Darlington)
Mikardo, Ian


Foot, Rt Hon Michael
Millan, Rt Hon Bruce


Ford, Ben
Miller, Dr M. S. (E Kilbride)


Forrester, John
Mitchell, Austin(Grimsby)


Foster, Derek
Mitchell, R.C. (Soton Itchen)


Foulkes, George
Morris, Rt Hon A. (W'shawe)


Fraser, J. (Lamb'th, N'w'd)
Morris, Rt Hon C. (O'shaw)


Freeson, Rt Hon Reginald
Morton, George


Freud, Clement
Moyle, Rt Hon Roland


Garrett, John (Norwich S)
Mulley, Rt Hon Frederick


Garrett, W.E. (Wallsend)
Newens, Stanley


George, Bruce
Oakes, Rt Hon Gordon


Gilbert, Rt Hon Dr John
Ogden, Eric


Ginsburg, David
O'Halloran, Michael


Golding, John
O'Neill, Martin


Graham, Ted
Orme, Rt Hon Stanley


Grant, George (Morpeth)
Owen, Rt Hon Dr David


Grant, John (Islington C)
Palmer, Arthur


Grimond, Rt Hon J.
Park, George


Hamilton, James (Bothwell)
Pavitt, Laurie


Hamilton, W.W. (C'tral Fife)
Pendry, Tom


Harrison, Rt Hon Walter
Penhaligon, David


Hattersley, Rt Hon Roy
Pitt, William Henry


Healey, Rt Hon Denis
Powell, Raymond (Ogmore)


Heffer, Eric S.
Prescott, John


Hogg, N. (E Dunb't'nshire)
Price, C. (Lewisham W)


Holland, S.(L'b'th, Vauxh'll)
Race, Reg


Home Robertson, John
Radice, Giles


Homewood, William
Rees, Rt Hon M (Leeds S)


Hooley, Frank
Richardson, Jo


Horam, John
Roberts, Albert (Normanton)


Howells, Geraint
Roberts, Allan (Bootle)


Hoyle, Douglas
Roberts, Ernest (Hackney N)


Huckfield, Les
Roberts, Gwilym (Cannock)


Hughes, Mark (Durham)
Robertson, George


Hughes, Robert (Aberdeen N)
Robinson, G. (Coventry NW)


Hughes, Roy (Newport)
Rodgers, Rt Hon William


Janner, Hon Greville
Rooker, J.W.


Jay, Rt Hon Douglas
Roper, John


John, Brynmor
Ross, Ernest (Dundee West)


Johnson, James (Hull West)
Ross, Stephen (Isle of Wight)


Johnson, Walter (Derby S)
Rowlands, Ted


Jones, Rt Hon Alec (Rh'dda)
Ryman, John


Jones, Barry (East Flint)
Sandelson, Neville


Jones, Dan (Burnley)
Sever, John






Sheerman, Barry
Steel, Rt Hon David


Sheldon, Rt Hon R.
Stoddart, David


Shore, Rt Hon Peter
Stott, Roger


Short, Mrs Renee
Strang, Gavin


Silkin, Rt Hon J. (Deptford)
Straw, Jack


Silkin, Rt Hon S. C. (Dulwich)
Summerskil, Hon Dr Shirley


Silverman, Julius
Taylor, Mrs Ann (Bolton W)


Skinner, Dennis
Thomas, Dafydd (Merioneth)


Smith, Rt Hon J. (N Lanark)
Thomas, Mike (Newcastle E)


Snape, Peter
Thomas, Dr R. (Carmarthen)


Soley, Clive
Thorne, Stan (Preston South)


Spearing, Nigel
Tilley, John


Spriggs, Leslie
Tinn, James


Stallard, A. W.
Torney, Tom




Varley, Rt Hon Eric G.
Willey, Rt Hon Frederick


Wainwright, E. (Dearne V)
Williams, Rt Hon A. (S'sea W)


Wainwright, R. (Colne V)
Wilson, Rt Hon Sir H. (H'ton)


Walker, Rt Hon H. (D'caster)
Winnick, David


Watkins, David
Woodall, Alec


Wellbeloved, James
Woolmer, Kenneth


Welsh, Michael
Wrigglesworth, Ian


White, Frank R.
Wright, Sheila


White, J. (G'gow Pollok)



Whitehead, Phillip
Tellers for the Noes:


Whitlock, William
Mr. Allen McKay and


Wigley, Dafydd
Mr. Frank Haines.

Question accordingly agreed to.

Orders of the Day — Joint European Energy Policy

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Brooke.]

Sir Anthony Meyer: I asked for this debate because I was dissatisfied with the reply that I received from my right hon. Friend the Secretary of State for Energy on 21 December. I asked my right hon. Friend whether the energy objectives of the EEC member States could not be best achieved by a Community energy policy; and he replied that the achievement of the objectives which he had defined
does not imply a common energy policy of a centralised nature, such as the common agricultural policy, nor is there any reason to suppose that other Community countries would be prepared to agree to a policy that would give a substantial benefit to one member country."—[Official Report, 21 December 1981; Vol. 15, c. 610.]
It is my contention that a Community energy policy in the EEC would be the most effective way of achieving the energy objectives of individual member States, the objectives as defined by the Secretary of State, and that the example of the common agricultural policy is one to follow, though avoiding the complications and the bureaucracy of the CAP, rather than to shun. The United Kingdom is far better placed than any other EEC member to advance a sensible energy policy and to get it accepted. The argument that should appeal to the super-subtle mind of the Secretary of State—I can hardly expect such deviousness from so untainted a politician as the Under-Secretary of State—is that merely by putting forward a scheme in which our good European intentions would be so manifest, we would enormously enhance our wilting reputation for being good Community members and thus appreciably improve our chances of achieving our other objectives within the EEC.
The objectives of an energy policy, whether purely national or European, are to give industry and consumers assured supplies of energy at competitive prices. I believe that to some extent these objectives can be promoted by a centrally administered EEC policy to be applied within each member State, but I accept that the difficulties and the objections are powerful. I do not accept that they are so totally insuperable as the Department of Energy has always maintained under successive Governments. The CAP, with all its defects, has maintained a stable agricultural industry and assured supplies of food, even at times of world shortage, at prices which on average have not been nearly so far above world prices as most people seem to think. Such a policy can point the way to a Community energy policy which would be to the long-term benefit of the peoples of each member State as well as to the Community as a whole.
If the argument against making any attempt to secure a common internal energy policy for the EEC, even to the limited extent of rapid convergence of national energy pricing policies and the intensification of cross-frontier and cross-channel energy transfers, is not accepted because of the difficulties posed by the entrenchment of national energy traditions, the arguments for a real effort to get a common external energy policy for the EEC are infinitely more compelling and more urgent.
As Mr. Geoffrey Denton puts it in his article in the March 1981 Three Banks Review,

the EEC should … operate as a unit, the better to secure its interests as against those of the US, Japan and other consumers. This is especially important given the weakness of the US resolve to stop and reverse its growing dependence on oil imports, and the great power of Japan as a trading nation to buy its way out of trouble by paying what the oil producers demand. The US has actually subsidised energy imports which, seen from Europe, is a ludicrous policy for a country with the largest energy consumption per capita, and one of the lowest prices, in the world. Pressure on the US to change the direction of its policy is a high priority for an EEC Common External Energy Policy.
Can it seriously be argued that those objectives can be more effectively secured by even such relatively energy rich countries as the United Kingdom trying to exert pressure on their own? All the arguments for joint EEC external action for resisting United States or Japanese commercial pressure, which even so sceptical a European as the Secretary of State for Trade fully accepts, apply with equal or greater force in the matter of energy. Europe acting as one can limit the extent to which the United States can make every consumer and every firm in Europe pay for America's insatiable thirst for cheap petrol.
If the main objective of a Community energy policy is to assure supplies of energy at competitive prices and because Europe is not self-sufficient in energy sources, it follows that a main element in any Community policy must be an attempt to reduce dependence on outside sources of energy, and to ensure that supplies from outside are as immune to interruption as possible. The latter objective is best secured by the EEC using its full muscle power, as the world's largest trading bloc, to get good long-term supply contracts. The former objective, that of reducing reliance on outside supplies, can be achieved by various methods—by stimulating new sources of energy and by encouraging energy saving techniques.
At first sight, those two approaches can be almost equally well applied by individual nation States. The French nuclear programme is there to prove it. On the other hand, might not the rest of Europe, and perhaps even France herself, be enjoying cheaper and more secure energy supplies had not Gaullist France strangled Euratom in its cradle?
I shall take another example nearer home, in my constituency. As the Minister knows, the Point of Ayr colliery in my constituency is to be the site of a twin pilot plant for the conversion of coal to oil by a pair of related processes evolved by the National Coal Board at its experimental centre at Cheltenham. I need hardly say how important that project is to my constituency in terms of jobs and spin off, nor need I stress its long-term significance to the United Kingdom, given that our oil will run out before our coal. None the less, in purely commercial and national terms, the scheme is so nearly marginal that the NCB is having a job to raise from private sources the necessary investment capital.
I stress that I have been in touch with the NCB as recently as last Thursday, to ensure that no snags have arisen. I have been assured that there have been no snags. On the other hand, it is clear to me that that is just the sort of project that the EEC should be backing to the hilt instead of the relatively modest £7 million contribution that it is making. The oil companies should be fighting to get in on a good thing instead of playing Lady Bountiful because such a scheme, which offers the prospect of assured indigenous oil supplies until well into the next century, while it may be semi-marginal for the United Kingdom with the North Sea coming on full stream, is of tangible and immediate benefit to the EEC as a whole.
What about the gas-gathering pipelines? I understand that those are schemes that are dear to the hearts of energy Ministers but which have fallen victim to the Treasury's mania for saving 20p today, even if it will cost £1 million in five years' time. Those schemes, too, could not have been described as marginal even by the British Treasury, if they had been evaluated in the context of a wider and longer-term energy policy.
At present, the British concentrate on getting their oil and gas ashore to Britain and the Norwegians theirs to Norway, with a bare minimum of purely bilateral mutual concessions for short-term objectives. A longer-term policy with a European dimension would envisage the day when United Kingdom supplies of gas were dwindling and Norwegian supplies exceeding requirements and would devise a pipeline system connecting Norway and the United Kingdom with the rest of Europe—a system under which we at first might be giving more than we received but of which we should be eventual beneficiaries.
If there is to be a common energy policy of any kind, it will need money to finance the joint policy, although even the most visionary of European integrationists are not thinking in terms of billions of pounds. As one of the objects is to reduce imports of energy from outside the Community, the obvious source of finance is some kind of charge on imported coal, oil and gas. If this were set at a relatively high figure such as 6 per cent. or 10 per cent., it might have a really sharp impact on oil imports. It would also make a dramatic contribution towards solving the problem of the United Kingdom's unfairly large budgetary payments to the EEC, as we should not be net contributors under this head because we import so little energy. On the other hand, I recognise that the implications for other economic activities and for the United Kingdom's and the EEC's foreign commercial relations are so far-reaching that such an idea is in present circumstances a non-starter. However, a very low levy of, say, 1 per cent., while it would do nothing in itself to discourage imports and would make a negligible contribution to the solution of the United Kingdom's budgetary problem, would yield some £750 million per year, which could finance a number of really worthwhile projects in new energy sources or energy saving which might not be commercially viable without the Community energy policy providing the funds for them.
In conclusion, I make plain what my charge against the Department is. I say "Department" and not "Minister" because I find disappointingly little change even under a new Government or a new Secretary of State or, perhaps even more relevant, a new Permanent Under-Secretary of unrivalled experience in European matters and universally admired judgment. I do not assert that the Department has been dragging its feet. I know that the Minister will tell me that we have paid our subscriptions in full and promptly by pledging the required reserves both to the international energy agency for major crises and to the EEC's own programme for sub-crises. I accept in advance what he will tell me, but he will not, I think, succeed in convincing me that we are taking all the tricks that are there for us to take.
As Malcolm Rutherford puts it in his recent book, "Can We Save the Common Market?":
The Oil is already flowing to Europe, but Britain has so far failed to seek any compensating political reward. It is as if it were

all happening by accident, with no foreign policy conclusions to be drawn. The initiative lies with Britain. It is the only member with the resources credibly to propose a common energy policy. And the rest of the Community knows that this is so, because, whenever Britain starts to talk about energy, the Community begins to listen. The energy card is the one that no other member holds, and it is sheer timidity, or maybe just a surfeit of defeatism, not to play it. Failure to use the card means wasting it, not conserving it, because the oil is being consumed in any case.
I do not think that I can improve on that. We have a unique opportunity and we are throwing it away.

The Under-Secretary of State for Energy (Mr. David Mellor): I am very glad to have the opportunity to respond to my hon. Friend the Member for Flint, West (Sir A. Meyer) on the subject of EEC energy policy. The House has the warmest admiration for my hon. Friend and for his experience in foreign affairs and, above all, for his commitment to the European Community, which is restated regularly and eloquently in the House. I particularly welcome the fact that he is now taking an especial interest in energy policy.
I begin by saying that it is right that the Community should have an energy policy suited to the needs and aspirations of member States. However, European Community energy policy guidelines must give member States the flexibility to frame their energy policies in the light of their own circumstances and priorities, but within an overall Community framework. Progress, to be real, must be based on consensus, and due regard must be had to national circumstances and interests. The Community must aim to develop sensible Community policies on areas of shared concern, but the structure must be based firmly on national programmes, complemented, where appropriate, by action at the Community level. In our view, only in that way can a realistic and effective Community energy policy emerge.
Much has already been achieved by the Community—for example, on the fundamental question of oil consumption, which was at the heart of what my hon. Friend had to say. The EEC has set itself energy policy guidelines for 1990 about reduced oil dependence and oil use. As the House will know, these objectives are three-fold: first, to reduce to 0·7 or less the average ratio between the growth in energy consumption and the rate of growth of GDP; secondly, to reduce oil consumption in the Community to about 40 per cent. of gross primary energy consumption; and, thirdly, to cover 70 to 75 per cent. of primary energy requirements for electricity production by solid fuels and nuclear energy.
The Commission has placed upon it the obligation to report on progress towards obtaining these guidelines, and the United Kingdom is playing its full part in achieving them. Indeed, in 1980 our oil consumption was about 40 per cent. of the United Kingdom's gross primary energy consumption, and more than 88 per cent. of our electricity was generated from coal and nuclear sources.
The Community's energy policy is continuously evolving. Under the United Kingdom Presidency during the last six months of 1981, the Community made important progress in several areas. I should like to refer briefly to the Energy Council held on 27 October last year, at which I had the honour of sitting at the United Kingdom desk.
On energy pricing, which lies at the heart of so much of the concern that hon. Members express about our


partners in the Community, the Council reached substantial agreement on conclusions that were formally adopted at a meeting on 3 December. These conclusions stated, first, that consumer prices must not be kept at artificially low levels and prevented from providing reliable market signals; secondly, and perhaps most important, that any differences in pre-tax energy prices that do not arise from genuine competitive advantage or from priorities consistent with Community energy objectives must be clearly identified and, to the extent that they arise from differences in public policy, progressively reduced; and, thirdly, that consumers should have adequate access to information on energy prices and the methods by which prices and tariffs are determined.
The Energy Council reached agreement on guidelines for dealing with a limited shortfall in oil supplies as a basis for consultations with other industrialised countries in the IEA. The aim is to devise procedures that might be adopted to prevent a shortfall in oil supplies leading to unrealistic pressure on prices. This is plainly a matter where it is of the essence that there should be not just Community agreement but the widest agreement among industrialised nations.
Looking to the future, there was also a most useful discussion on a Commission paper on the development of the Community's energy strategy. The conclusion reached was that the Council should keep this under review and refer to the matter again at a subsequent session as part of the developing discussion.
Finally, and of relevance to those who rightly look to the EEC as a source of finance for research and development schemes on energy matters within the Community, the Council approved the seventh round of Community projects in the hydro-carbon sector, totalling 26 million ECUs. The House will be glad to know that United Kingdom projects represented about 25 per cent. of the total, which shows that we are obtaining a proper benefit from the scheme. Real progress was made and we look for further developments in the next 12 months.
Turning to some of the points made by my hon. Friend, particularly about the problems posed by the international oil situation, I have already mentioned the limited shortfall provisions, designed to deal with the sort of situation that arose as a result of the Iranian revolution and the beginning of the Iran-Iraq war.
We all know that the level of oil consumption is at the heart of Community discussions. The shock of the oil price increases in 1979 and 1980, following on the heels of the tremendous rises in 1973, has had a salutary effect on oil consumption across the world. For example, in Japan and the Federal Republic of Germany substitutions of other fuels for oil have proceeded apace, along with growing efficiency in the use of energy.
High energy prices are unpleasant to live with, but, where prices have been allowed to signal real costs to consumers, worthwhile savings have been made. Progress has been made even in the United States, following the acceleration of the de-control of oil prices by the Reagan Administration. I agree with my hon. Friend that international pressure on issues such as unfair pricing is better exercised collectively and that our membership of the EEC can only be helpful. We are active members of the Community in that regard.
As was recognised by all member States in the Council's discussion of limited shortfalls, the EEC, large

as it is, is merely a part of the industrialised world and progress is to be made it is essential that agreement be reached by the other developed nations in the IEA.
My hon. Friend suggested that we do not gain political capital from our oil reserves. I remind the House that we have the oil available only because of the efforts of offshore licensees and operators, largely in the private sector, who put in the money and bought the expertise to exploit our resources. Those licensees have the freedom, subject to participation agreements, to dispose of their oil as they see fit, to our IEA and EEC partners. We cannot take the dubious benefits that complete political control over oil would confer, given our choice of harnessing private sector operators to exploit the reserves under licence. The only oil over which the Government have direct control is that taken as royalty and that taken at market price under the BNOC participation agreements.
My hon. Friend referred to the gas-gathering pipeline. There is no doubt that such pipelines will be constructed, but they will be built by the private sector, as has been the case with previous oil and gas exploration work. The northern leg pipeline is to be connected to the FLAG system—the Shell-Esso pipeline from Brent to St. Fergus. That is an example of what the private sector can achieve.
Much of the oil from the North Sea finds its natural market in the United Kingdom, but it is only in the past year that, in overall terms, we have become self-sufficient. The world energy market is not static. The demand for oil has fallen dramatically in OECD countries over the past two years. Most commentators expect oil to be freely available for a few years more, but it is important to make the most of what we have. Equally, we must take care not to over-rate its value. In the long term, it may be the case that oil will again become scarce and that political initiatives by the Community to seek out long-term supply contracts will become worth while. That moment is not now. I do not believe that we would be better placed by seeking to secure our supplies through a Governmental initiative than by leaving commercial operators, both State oil companies and the private sector firms, to trade in the market as now.
Another aspect of our common European Community policy to which my hon. Friend referred is the funding of research and development and demonstration projects. The Community has a good record of carrying out and supporting research and development into renewable sources of energy. The Commission's report on the achievements of the first four-year programme—a copy is in the Library—shows the range of projects that have already benefited. We are now part of the way through the second four-year programme, which is larger and going well.
A total of over £60 million expressed in European currency units is being made available on programmes covering energy conservation, solar energy, geothermal energy, hydrogen and energy systems analysis. The United Kingdom receives a good return from the programme. Now that our own research and development is in full swing, extensively developed under the present Government, we hope to do even better.
I turn to demonstration projects. I understand my hon. Friend's interest in the coal liquefaction project. We have done our best to stimulate Community interest in coal research and demonstration projects. Coal conversion now plays its part in the demonstration project schemes offered by the Community that include solar energy, geothermal


and energy saving projects. The projected coal liquefaction plant illustrates the point I have already made about the link between national and Community arrangements. We have agreed to make available £5 million out of our own research budget. It is a substantial part of the budget. We know that substantial Community funds are also likely to be available.
We attach importance to the availability of funds from private industry as well. At the end of the day, research and development will need to be commercially exploited. It is of the essence that there should be a genuine partnership between the Government and the Community on the one hand and the oil companies on the other.
It would perhaps also be appropriate to mention, as my hon. Friend referred to Euratom, that the Community has always encouraged member nations to work together on nuclear research. The Community fusion programme is the most important Euratom research and development project. It has our full support. Its centrepiece is the JET project that has so far gone according to plan and time. The basic machine is scheduled for completion in 1983. It is hoped, in due course, that it will demonstrate the scientific feasibility of fusion, the first real step towards development of a fusion reactor. It is the only machine currently under construction that could acheive this.
There are a number of valuable Community programmes concerned with nuclear matters. The United Kingdom participates actively in all of them. In purely practical terms, we get back rather less than we contribute overall. There are, however, substantial benefits to United Kingdom scientific knowledge and useful contacts for United Kingdom industry. This is particularly true of JET.
It is the firm view of the Government that there is a balance to be struck between action at Community level and action at national level. The main contribution in meeting the guidelines set out by the Community will come from the national energy programmes of member States, and we believe that that must be so. But we are equally clear that it will be necessary for these to be supplemented by action at Community level where this is beyond the resources of the private sector and where this is best conducted at Community rather than at national level. We believe that this proper partnership between national activities and collective Community action is the firm base upon which Community energy policy can develop and flourish.

Question put and agreed to.

Adjourned accordingly at 10 minutes past Eleven o' clock.